Investor Insight 37, July 2016

The first half of 2016 has been dominated by volatility across all asset classes and last Friday’s Brexit referendum has only added to this volatility.

Our view towards markets therefore continues to be “cautious”. Continuing political uncertainty in the UK and EU, negative interest rates in many bond markets and some equity markets that appear near fully priced, has led us to this cautious stance across asset classes.

Once the initial Brexit related volatility subsides, equities will continue to be driven by momentum, be it through increased M&A activity or domestically in Australia as investors crave yield on the back of decreasing interest rates (its Australia’s turn to play the interest rate game hence our domestic market outperforming global equities).