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As 2019 comes to an end and
2020 comes into view with the
promise of Brexit and further
upheaval in the capital markets,
The TRADE spoke to a range of
cross-industry participants to find
out what they think will be the
top trends for the coming year.
Geir Lode
head of global equities, Hermes
Investment Management
Since the financial crisis in 2008, growth has consis-
tently outperformed value. This outperformance has
accelerated since 2017, to the extent that growth is
now more expensive than at any time since the Tech
Bubble at the turn of the century, even allowing for
September’s value rally. Global economic indicators
have started to worsen, exacerbated by the US-Chi-
na trade tensions, Brexit uncertainty, Middle East
tensions, protests in Hong Kong and numerous other
geopolitical risks and flashpoints. This backdrop has
polarised investor sentiment and prompted sharp
swings in risk appetite, which may be a signal that
the drivers of the current bull market are becom-
ing less sustainable. A market inflection is likely to
normalise the relative valuation between growth and
value. However, as growth rates decline, the likelihood
of lower interest rates increases, with some equity
investors welcoming weak economic news in the hope
that this will prompt central banks to cut rates further,
propelling markets – and growth – even higher. As
such, predicting when the growth rally is likely to end is
extremely difficult.
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