US-China tension requires "flexibility", says David Cumming

clock • 2 min read

Besides Brexit, David Cumming, Aviva's chief investment officer for equities, identifies two other major macroeconomic influencers that might impact the UK

One is the US economy, which he believes is unlikely to slow sharply, despite the market panic at the end of 2018. Indeed, January saw US jobs grow for the 100th consecutive month.

The other point of tension is China's economy and the impact of its trade battle with the US. While he has no firm view on the outcome, Cumming points out that "Trump tends to do deals in the end - that's what happened with Mexico and Canada."

He believes China still presents some long-term risk, though government measures - including higher public spending and tax cuts for small business - have secured stability for the short term.

In a crisis, he notes, "people lose emotional control, so sometimes you get dislocation that provides opportunities.

Cumming says: "You just have to stay flexible. Equities is not one of those markets where you can shut down risk and open it up again.

We're buying companies where you're going to have to take risk positions."

Back home, the economy may be sluggish, with the Bank of England forecasting growth of 1.2% for 2019 - the slowest in a decade. But Cumming sees no cause for deep concern.

"There's nothing that tells me the UK is going to fall into recession this year," he concludes. "On that basis, I'm quite bullish about the markets."

The key for us is to perform. I am confident we will deliver outperformance because we've done that historically.

From my perspective, we want to win money in retail, we want to win money in institutional and we want Aviva to move from passive to active more, because we've got more capabilities there. On the retail side we have good fund managers and a good process. Our brand is being repositioned. So, there are a lot of things to aim at.

Click here to learn more about how Aviva Investors' equities strategies are navigating geopolitical tensions

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