Valuations compelling as quality names offer good long-term upside

Equity markets in the second quarter bounced in response to the unprecedented policy actions around the globe.

Markets were buoyed by increasing evidence that the pace of economic decline was easing, leading to a particularly strong performance by industrial cyclical, small-cap and commodity stocks. Companies with stable earnings and strong balance sheets were left behind, as focus shifted to the prime beneficiaries of economic stabilisation. Indeed, there was also evidence of anticipation of a ‘V-shaped’ recovery which, if it were to occur, would clearly favour economically and financially sensitive stocks. More recently, however, we have seen the risk rally appear to run out of steam and a broaden...