Greece and China take toll on equities
Mark Burgess, CIO EMEA and global head of Equities, Columbia Threadneedle Investments
The negotiations over Greece’s debt, which seem to be taking as long as Odysseus’ tortuous voyage home from Troy, continue to take a toll on global stock markets. Poor economic data also unnerved investors in May.
Turbulent Chinese markets at the end of the month provided a further reason for caution. However, Japanese equities had another strong month, with the weaker yen lifting sentiment on Japanese exporters, while at the same time muting market returns in sterling and dollar terms.
Hopes of increased share buybacks by Japanese companies and better-than-expected corporate earnings also provided support, as did the country’s first-quarter GDP growth reading, which came in at a forecast-beating 0.6% (subsequently revised up to 1%), and pushed the Nikkei to a 15-year high.
We have reduced the magnitude of our overweight in equities in our asset allocation portfolios; specifically out of Europe ex UK equities, and UK equities, but we remain overweight in both regions.