Experts from international investment houses seem to agree on one thing: 2020 will not be a year of great celebration for the financial markets. Although there will be no real thud of the stock exchanges, there are too many unknowns that can affect the portfolio of investors. First of all, there is a slowdown in the world economy, which next year will grow less than in 2019 in almost all geographical areas, from the United States to Asia, via Europe.
Then there are some geopolitical events such as Brexit, Britain’s exit from the European Union, which can bring some instability to the international business community. And finally, there is the rise in interest rates around the world, a trend that is usually not good for bonds and government bonds already traded on the market, whose prices are destined to deflate because they now offer returns too low compared to newly issued bonds. With such a complex underlying scenario, the question is: where should we invest in 2020?
Equities, but with judgment
The U.S. financial giant BlackRock, an investment house that manages over $6 trillion worldwide, has a neutral position on most asset classes, the investment classes available on the market. The advice, for now, is to increase the weight in the portfolio a little only for the shares of the United States, emerging markets and Asia.
In all these regions, in fact, there is still a robust growth in corporate profits that for BlackRock can give a boost to stocks. A different matter, however, for European equities that may be out of breath due to a slowdown in economic growth in the Old Continent. Not very flattering is the opinion of the overseas investment house also on European government bonds, whose yields have been nailed for years to record lows while their prices are still too expensive, inflated by the stimuli of the ECB by Mario Draghi.
Gold to play in defense
Experts from Dws, the management company of the Deutsche Bank group, have also recently highlighted some risk factors that should not be underestimated for the financial markets. In addition to Brexit’s Stefan Kreuzkamp, the German company’s investment manager, he urges us not to overlook the possible effects of new trade tensions between the United States and China and the worrying level reached by the indebtedness of companies in the People’s Republic, which are in danger of entering into a spiral of financial difficulties.
For this very reason, for those who want to build a well-diversified portfolio with antibodies against risks, the experts from the German investment house recommend to also focus on gold, a safe haven par excellence that not only revalues during periods of crisis, but also protects the returns during the periods of volatility of the stock exchanges. In the long run, the yellow metal does not betray.