Josh Mahoney, market analyst at IG
Mr Mahoney says every investor faces exactly the same problem at the moment: safe havens such as cash and bonds don’t give you anything.
“That forces people to take a greater risk by investing in riskier assets such as the stock market or property,” he says.
He advises against shunning equities altogether. “Stocks are not necessarily a bad place to be. Central bankers are not suddenly going to stop the medicine and leave the patient to die.”
Mr Mahoney says the economy and stock market do not always move in lockstep. “The economy could go down the pan but stock markets would hold up because of easy monetary policy, which is all anybody cares most about these days.”
Even in today’s turbulent world, old investment mantras still apply. “Diversification is important, you need to spread your money between different companies, regions and markets. The best way to do this is through low-cost exchange traded funds (ETFs), which allow you to invest in hundreds of different stocks across a range of sectors,” Mr Mahoney says.
He suggests avoiding the banks, which remain mired in financial trouble almost a decade after the financial crisis, with low and negative interest rates squeezing margins.
The oil price appears to be recovering but, again, Mr Mahoney is cautious. “I do not expect crude to climb that much as US shale isn’t going anywhere, and if the price rises supply will increase.”
However, he expects further growth in the mining sector and recommends a spread of big-name stocks such as Anglo American, BHP Billiton, Glencore and Rio Tinto.
Mexico and Latin America could be an interesting play as well, he says. “The Mexican currency has been hit hard by Trump’s aggressive talk about immigration but if Clinton wins we could see a big reversal.”
Emerging markets have done well lately but Mr Mahoney warns of further headwinds. “They have a lot of US dollar-denominated debts and could struggle if the Fed starts raising interest rates, as servicing these debts will become more expensive.”
Christopher Dembik, head of macro analysis at Saxo Bank
Investors need to be selective in their search for yield, says Mr Dembik.
“Emerging markets are tempting but not all of them. My bet is that the Philippines peso, Mexican peso and Indian rupee will perform quite well in the coming months, due to improving domestic figures and the positive influence of the US economy, especially on Mexico.”
The US green energy sector could benefit if Hillary Clinton wins the presidential election, while the unmanned aerial vehicle drone surveillance and biometrics industries in France and in Germany are also promising, Mr Dembik says.
He recommends avoiding property in global cities across Canada, Switzerland, Australia, Singapore and the UK, where valuations have become too stretched. “Property prices in these areas can only go down in the coming years.”
But he tips Paris for further growth. “The Parisian real estate market has seen three housing bubbles burst over the past 30 years, but each time the drop in prices was very low, compared with, say, the UK or US. Low housing supply means that any drop is quite limited and prices quickly recover, which makes it very interesting for investors.”
Mr Dembik also calculates that traditional safe havens such as gold, the Japanese yen and US dollar will thrive. “Gold may still represent the best non-taxable investment in case the worldwide economy derails.”
But the gold price has fallen by about 4 per cent in the past 30 days to about US$1,262, as initial Brexit fears subside and the Fed cools on interest rate hikes. Even US electoral uncertainty has failed to excite gold bugs.
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