Raw materials remain under pressure on the suggestion that global growth will fall back and therefore demand may weaken further. As for banks, the likelihood of lower growth implies that interest rates will stay lower for even longer than previously anticipated which in turn squeezes the profit margin enjoyed by banks on their lending activities. Whist it is possible that global growth will slow further into 2016, including in western economies such as the USA and the UK as well as in China (although India continues to accelerate), it is our general view that longer term holders of sound equity funds should remain invested while for those holding cash awaiting investment, useful long term opportunities are beginning to present themselves.
Financial markets have, in the weeks since our Newsletter, remained unsettled. This has resulted in generally falling fixed interest yields (and correspondingly slightly higher values) while equity markets have fallen further – these falls focusing on, but not limited to, companies involved in raw material sectors and banks.