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Threadneedle's AA-rated Leigh Harrison's top three equity markets
by Nick Tay on Aug 21, 2013 at 11:37
Citywire AA-rated Leigh Harrison of Threadneedle Investments favours the UK, Japan and emerging markets (EMs) over other equity markets.
The eurozone’s challenges, said Harrison who is the firm's head of equities, and the poor growth outlook make it difficult to be constructive from a regional perspective, while in the US, valuations reflect the good market news and better value exists elsewhere.
'The markets we are positive on are: the UK because it is a truly global stock market with a high percentage of overseas earnings; Japan, because we believe that “Abenomics” has the potential to produce a seismic shift in the outlook for the economy and corporates (but there are significant risks); and EMs, despite the recent headwinds.’
The Citywire A-rated Harrison has managed the Threadneedle Investment Fund II UK Eq Inc Ret fund since November 2011.
While positive on equities, Harrison isn’t fazed by earning expectations downgrades, noting that profit growth will continue to sustain dividend yields and dividend growth. Relative to other assets, he said, equities are still attractive.
‘The recent (earnings) downgrades are, however, a reality check. We have never subscribed to the view that we are likely to see a robust global economic recovery given the headwinds of excessive debt, a challenged banking system in Europe and unsustainably fast growth in China.’
What is inevitable, said Harrison, is the end of QE which will present challenges for markets and corporates are unlikely to enjoy the strong tailwind of easy monetary policy. ‘We believe there are hard yards ahead in the global economy for a number of years from here,’ he added.
From the start of 2013 to end -July 2013, Threadneedle Investment Fund II UK Eq Inc Ret has returned 13.78% against the benchmark FTSE All-Share TR return of 8.05% in USD terms.
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