Global Sovereign Wealth Funds To Abandon Stocks Amid Trade War Tumult

Wednesday, July 11, 2018
By Paul Martin

by Tyler Durden
Wed, 07/11/2018

As the hopes and dreams of the end of the trade war – that delusionally sustained around 800 Dow points of exuberance in the last few days – are dashed at the altar of Trump tariff reality, it appears the world’s sovereign wealth funds are well ahead of the looming storm.

And away from 3 or 4 mega tech stocks, the broad US equity market is not ‘breaking out’ as many hope..

In an annual report by asset manager Invesco, over a third of sovereign investors plan to cut their equity exposure over the next three years after a strong run in 2017, citing trade wars, geopolitics and high valuations as headwinds to performance.

Reuters reports that the report, which is based on interviews with 126 sovereign investors and central bank reserve managers with $17 trillion in assets, found equities had overtaken bonds to become the biggest asset class in portfolios, averaging 33 percent. This is up from 29 percent in 2017.

Nearly half of sovereign investors are now incrementally or materially overweight equities, but while 40 percent said they were happy with the status quo, 35 percent plan to reduce their equity exposure over the medium term, Invesco noted.

Alex Millar, head of EMEA sovereigns at Invesco, said survey participants had been “pretty far-sighted” in highlighting the risk of a trade war early in the year.

“Equities had a good run last year, but this hasn’t caused investors to change their long-term expectations – they think returns going forward will be tough,” said Millar.

The Rest…HERE

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