Equities

Stock markets around the world have managed to claw back some of their recent losses this week but major indices remain well off the highs recorded around the turn of the year.

Portfolio managers Craig Adey and James Thorne discuss how UK small and mid-caps have historically outperformed significantly following a cyclical trough, and the opportunity this presents in the future as investors in this space.

Recent losses have intensified as stock markets around the world endured one of their toughest weeks of the year so far. With investors focusing once again on central bank attempts to curb rampant inflation, this week’s key events were policy decisions from the United States Federal Reserve, the European Central Bank (ECB) and the Bank of England (BoE) – in each case, however, officials offered little in the way of positive news.

Rising interest rates and the threat of a new global recession have caused renewed turbulence on stock markets around the world this week, with high levels of uncertainty and anxiety among investors leading to major swings.

In the current environment, Asian dividends are expected to grow at twice the rate of inflation as Asian equity recovery continues to broaden, with stronger earnings feeding through into a broad-based recovery in dividends. Strong balance sheets and robust cashflows are likely to support a faster than expected recovery in dividends across the regions, including sectors not traditionally associated with high pay-outs, such as Technology. Simultaneously, Asia’s evolving demographics are likely to result in continuing domestic interest in companies that can pay sustainable, growing dividends over time.

Rising interest rates and the threat of a new global recession have caused renewed turbulence on stock markets around the world this week, with high levels of uncertainty and anxiety among investors leading to major swings.