Market Commentary August 2013

Please find this month’s Market Commentary newsletter which contains our view on the stock market based upon fundamental and technical analysis along with some recommended investments for the current market.

Since our last market commentary, in which we moved to equalweight on equities (from overweight), the FTSE 100 has fallen 168 points (2.5%).

Our individual recommendations from last month did not fare so well with BATS down 3.8%, Imperial Tobacco down 1.9% and the iShares Emerging Markets Dividend ETF down 6.2%. We are still bullish on all three, in particular Emerging Markets. The old stock market adage “only monkeys pick bottoms” springs to mind and we continue to advise buying at these levels. Successful long term investing requires buying “humiliation” rather than “exuberance”. Bank of America Merrill Lynch are advising those with a longer term outlook to start looking at Emerging Markets. While policy makers have yet to panic sufficiently for an inflection point in global risk, an improving long-term risk-reward trade-off could make Emerging Markets the comeback asset class of 2014.

On a more positive note, long-term core defensive stock Vodafone surged ~9% yesterday after the mobile telecoms giant confirmed it was in talks to sell its 45% stake in US joint venture Verizon Wireless to American partner Verizon for around $130bn.

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