Future is a cyclical and defensive play

Although our investment decisions are based solely on stock-specific valuations rather than any top-down view, it is hard to ignore the signs the global economy is improving.

However, while attitudes towards developed economies have clearly improved, there is still a widespread view their prospects for this year remain poor. With that in mind, the consensus trade has once again shifted towards companies exposed to the developing world, in the hope of a swifter and more significant improvement in growth. The miners (core beneficiaries of Asian demand) have gained once again on this belief, but we continue to avoid the sector, feeling these growth assumptions have already been factored in and the stocks remain unattractive from a value point of view. Instead...