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The long and the short of 2020
2020 ushers in a new year and a fresh decade. It certainly began on a promising note.
Investors who stayed invested through 2019 have profited handsomely from the longest bull market on record. But recent days have also introduced uncertainties.
First, there is renewed tension in the Middle East, following the US' "targeted killing" of an Iranian military leader. As at press time, the US and Iran appear to have backed off further hostilities. A second source of uncertainty is the oil price, which initially spiked before tumbling back down.
Already some analysts have dismissed the tensions as a blip. Markets have rallied, and gold price fell.
To be sure, there are sound reasons for optimism in 2020: Central banks are expected to remain dovish, and corporate earnings resilient. Analysts believe the bull market is intact – it is, after all, said to be the most unloved bull market; the scepticism it has inspired is likely to ensure that it still has legs. This is despite the many macro uncertainties, including US-China trade issues which remain unresolved; the threat of tariffs by the US on European goods; and bond yields remaining very low and in negative territory in most of Europe.
Hence, investors would do well to pursue the well-trod path of diversification. A diversified portfolio that avoids concentrated risks or excessive leverage would enable you to reap rewards from markets, as it shields you from the vagaries of any single market exposure.
In our first edition for the year, we present, first, a longer term view of macro or mega trends that are likely to drive markets over the next 10 years. Investment ideas thrown up by these trends – such as millennial consumption and the intensification of climate change – have the potential to anchor your portfolio in the years to come.
But the near term matters as well, and so in our Roundtable, we gather the views of the movers of the wealth management industry on how portfolios should be positioned. UBS' Raymond Ang, for instance, calls a tactical overweight on Asian equities. Citi Private Bank's Jyrki Rauhio cautions that areas of fixed income which performed strongly in 2019 are unlikely to generate the same returns going forward.
In our At the Helm column, meet Abhinav Jhunjhunwala who heads AJ Capital, his family office. AJ Capital invests not just in public securities, but it has also incubated private companies in the fields of insurance and healthcare. One of its operating businesses, Symbo Platform Holdings, has just concluded its series A round of funding. The firm has also opened up its multi-strategy fund to other family offices and private investors.
In our Business Family Insights column, we cast the spotlight on the family behind Myanmar-based KBZ Bank, who has picked the concept of metta or loving-kindness as the ethos underpinning its drive to raise financial literacy and inclusion in Myanmar. On a lighter note, Rahita Elias shares tips on how to elicit and savour the flavours of fine cognac and whiskey, in a fitting celebratory start to a new year. We wish you a prosperous 2020!