Investment - Articles - Funding levels resilient despite political uncertainty

The markets have been consumed by the escalating US/China trade discussions with substantial tariffs being levied by the US on goods and services totalling $200 bn of imports. The US has managed to upset Europe as well, seemingly doing a u-turn on last month’s agreed direction of travel on not levying any new tariffs whilst negotiations progress.

 By Chris Collins, Senior Consultant, XPS Pensions Group

 Global equity markets have fluctuated notably but finished the quarter up modestly. Emerging markets overall ended the month modestly down. Emerging market currencies hit headlines with Turkish lira and Argentine peso suffering dramatic falls of 25% and 28% over August, with a number of other emerging market currencies sliding. There is scope for this to be contagious.

 Brexit uncertainty has given stage to numerous individual political agendas and increasing concern of a no-deal. Sterling has bobbed around the bottom whilst UK equities delivered a meaningful negative return, FTSE100 delivering more than its fair share of this fall.

 The Government has issued papers providing detailed reassurance on what a no-deal looks like, and whilst unappealing, it is important not to forget that the threat of no-deal is a vital element of negotiation strategy towards getting a good deal. That said, pension schemes cannot ignore the possibility and should be prepared for a no-deal.

 The month in brief:
 • Global equity markets fluctuated but ended up over August
 • ‘No-deal’ Brexit concerns becoming very real
 • Sterling volatility and poor UK equity performance
 • Emerging market currencies woes feed into returns
 • UK pension liabilities end the month near where they started

 Read the full update here


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