Schroders

According to Keith Wade, Chief Economist at Schroders, equity markets have experienced a setback recently and this has led many strategists to question the longer term case for the asset class. However, he remains positive on shares and believes that equities can still generate an attractive premium for investors.

Chinese GDP expanded 7.3% year on year in the third quarter, in line with Schroders’s forecast but slower than the second quarter reading of 7.5%.

There has been a substantial increase in volatility over recent weeks caused by a number of different factors which have significantly impacted investor sentiment. European equities have declined by almost 15% since mid-September and we would like to highlight this setback as a buying opportunity.

According to Schroders Azad Zangana, European Economist and Chris Ames, Senior Fixed Income Portfolio Manager, the cut in interest rates is totally irrelevant. Due to the glut of liquidity in money markets, short-term interest rates have been below the ECB’s main financing rate for some time – meaning that the latest cut will have near zero impact.

Over 2014 there has been a steady decline in the yield on German government bonds. As a result bunds have outperformed other developed markets. This outperformance could have been driven by two factors...