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Lifting lockdown remains a delicate balancing act

The post-Easter week brought continued relief for long-term investors, with a consolidation of the recovery from previous weeks followed by reacceleration towards the end of the week. That said, the continued strength of markets has not been welcomed by everyone. Perhaps it was telling that the most vociferous criticism of the recent economic and humanitarian support efforts from global policymakers came from the hedge fund community, many of whom chose to describe these efforts as either unjustified market interventions or the first steps towards state ownership and socialism. Might these hedge fund managers be frustrated at being wrong-footed twice, having missed the March crash, and subsequently doubling down by ‘betting’ on new market lows?

 

Large cap gains vs smaller company pains

Stock markets seem to have found a floor. After being in freefall throughout March, equities have rebounded strongly over the last couple of weeks, and this week entered a period of consolidation. Major indices in the US, UK and Europe all held onto recent gains. The newfound market confidence stands in stark contrast to the sheer panic so prevalent in March, when investors joined in with frantic doomsday preparations by selling everything that wasn’t nailed down.

 

Emerging Markets stand ready to emerge from the crisis

With the world economy closed until further notice, the main investment concerns now are not if we will see a global recession, but how long it will last, how bad it will get and – crucially – what will change after it ends. Regular readers will know that one of our main investment calls for the post-pandemic world is that the future looks brightest for China and wider emerging market assets.

 

Read the full commentary here

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