Global share markets ended August weaker, down around 6% on average in their home currency terms (but only 2% when translated to New Zealand Dollars). While markets have been strong for some time, August’s declines were sparked by some concern regarding the pace of manufacturing expansion growth in China.
It is important to note however that underlying economic growth around the world has remained fairly steady. In Europe, growth rates have continued to pick up moderately, while the United States economy expanded at a very solid 3.7% annual pace in the three months to June. Even in China, where growth levels have been moderating for some time, the gradual effects of government stimulus should support future growth. More generally, August’s volatility follows several years of strong gains (markets are still up 14% per annum since 2012, and around 20% per annum in NZD terms). Accordingly, over the past year we have been maintaining a level of insurance-type protection within the global shares component of Grosvenor portfolios. While designed to help offset some of the effect of any larger market declines (over 10%), this strategy also made a positive 1% contribution to Grosvenor global share returns during August, helping to smooth some of the market volatility. Click here to read more.
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