Whilst there have been several high-profile factors contributing to the risk off environment that has gripped global markets in recent months they all ultimately relate back to underlying concerns about the prospects for economic growth and earnings growth.
Entering the new year, many of these uncertainties remain unresolved with ongoing trade and geopolitical tension. Combined, this has created a mood of extreme caution amongst investors which has seen global equity markets and, indeed, most liquid asset classes sell off materially in the December quarter.
The good news for investors is that the steep sell-off has seen valuations on equities starting to price in a material slowdown in the global economy such that we believe there is valuation support now emerging in the market.