September’s investment market commentary

During September, the economic and corporate environment remained positive, however some equity sectors are beginning to look fully valued.
Published 18 October
2 mins

During September, our base case remained intact although there were signs of a peaking in the growth environment. We did however remain in expansionary territory. To this end the economic and corporate environment remained constructive for risk assets, although this is not to say that it was overly compelling as we had to reflect on valuations within certain equity sectors looking full. However, policy, particularly within developed markets, remained supportive with central banks seemingly comfortable with running economies hot for longer in order to stimulate a sustained economic recovery. In August’s commentary we highlighted that inflation control, for so long the raison d’etre of central banks, appeared to have given way for employment support and job creation in general, with the position of more dovish central banks remaining. And when unemployment is falling equities tend to rise.

The primary risk to our view remains with the efficient unlocking of global trade. Strong stimulus has created artificially high demand, which combined with supply chain challenges, has led to upward inflationary pressure. Our base case is that inflation will remain elevated but off near term peak levels and certainly manageable. We are therefore looking for the ‘goldilocks’ scenario with economies to run ‘not too hot, and not too cold’ for a period of time allowing central banks to maintain their dovish, supportive stance and for supply chain issues to run their course. The threat is that energy prices continue to spur inflation and stifle economic growth creating a stagflationary environment. 

COVID-19 itself remains a threat, albeit more peripheral than previously commented on. There is clear evidence of a levelling up of the global vaccine rollout, where previously we had observed a twin-speed split (where economic prosperity clearly played a role). The risk of an as yet unidentified variant displaying resilience to current vaccines should not be ignored but likewise can only be factored in if evidence presents itself. This scenario would clearly delay the global economic reopening.

We remain broadly positive on risk assets, but particularly towards developed equities and specifically to the more domestic markets within Western Europe including the UK. We are mindful however that emerging market valuations have become more compelling recently and may be of interest again in the near future. Within fixed income asset classes we prefer credit over duration given the uncertain backdrop of rates in the mid-term. Broadly, we feel that the environment is supportive towards default rates as economies expand. Last but by no means least we have a broad preference for real assets and certain alternative strategies, in part to provide diversification and a degree of insurance to portfolios, something that one might have relied on fixed income for in the past. But also to provide a degree of inflation protection to portfolios.   

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This month’s values quoted as at 30/09/2021. The above values are sourced from Bloomberg and are quoted in the relevant currency.

Clients of Nedbank Private Wealth can get in touch with their private bankers directly to understand how their portfolios are responding to market events or call +44 (0)1624 645000 and speak to our client services team.


If you would like to find out more about how we help manage clients’ investments, please also contact us on the number above. Or you can get in touch using the links to the forms towards the end of this page.

Investments can go down, as well as up, to the extent that you might get back less than the total you originally invested. Exchange rates also impact the value of your investments. Past performance is no guide to future returns. Any individual investment or security mentioned here may not be suitable, and is included for information only and is not a recommendation. You should always seek professional advice before making any investment decisions.

about the author

Tom Caddick

Tom Caddick

Tom was appointed in March 2021 and brings to the table over 20 years’ investment experience. Prior to joining, he was at Santander Asset Management in London for nine years, where he was, most recently, the chief investment officer for its UK business, having previously been the global head of the multi asset division. Tom also spent several years as head of multi manager and fund selection at LV Asset Management.

Tom sits within Nedgroup Investments, a sister company, which provides investment advice, research and portfolio modelling solutions to Nedbank Private Wealth. Here, he heads up the London-based investment team. It is in this capacity that he is a member of Nedbank Private Wealth’s investment committee.

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