Busy summer sets rest of 2020 up for blockbuster finish
Polls and politics mean no respite for investors
Investment Week is finally back in print after its summer hiatus, but August was not quite the uneventful respite investors are accustomed to.
We witnessed the continuation of the trend seen since mid-March lows of an equity market recovery, which Vafa Ahmadi of CPR Asset Management, characterised as "K-shaped", with index gains driven by substantial returns from top performers while others continue to lag.
Part of the impact has seen Tesla overtake Toyota as the world's most valuable car company by market cap and Apple's now $2trn market cap outstrips that of all FTSE 100 firms combined, as both companies opted to split their stock.
August also saw the confirmation of what most had expected, with figures from the Office for National Statistics showing the UK is in the throes of its "largest recession on record" after growth shrank by 20.4% between Q1 and Q2.
Of course, the UK is not alone in having seen its economy suffer in the wake of the coronavirus pandemic. August figures showed eurozone, Japanese and US GDP hit with double-digit falls respectively in the second quarter of this year.
Japan's real GDP has been brought to a decade-low ¥485trn, effectively wiping out the benefits of Abenomics stimulus policies.
On the subject of Shinzo Abe, August also saw the announcement he would step down as Japan's prime minister after eight years in the role.
While Abe will soon retire from public office, Abenomics is likely here to stay for the foreseeable future at least.
August also brought news slightly closer to home for the UK asset and wealth management industry. The Financial Conduct Authority (FCA) proposed steps to address the liquidity mismatch in open-ended investment funds that led to numerous fund suspensions in recent years.
The proposals include the implementation of a 180-day notice period for consumers redeeming investments.
While commentators have broadly welcomed the FCA's proposals, investors in suspended funds still face the prospect of a sudden fall in the value of their investments when the funds reopen.
If the performance of commercial REITs year-to-date is an indicator, funds with large allocations to commercial property - the majority of the IA UK Direct Property sector - could be set for substantial write-downs.
In other liquidity-related developments, investors in the ex-Woodford Equity Income fund received their third distribution, totalling £183m, from the collapsed vehicle towards the end of the month.
It has been a year characterised by uncertainty and risk for investors. But as we head into the home straight of 2020, investors are unlikely to find respite.
We have the US Presidential Election to look forward to in November, while in the UK, a hard Brexit looks more likely than ever as we approach the end of the transition period in December.
But whatever happens, the outlook for the Covid-19 pandemic, and government and central bank reactions to it, are likely to define market movements for the coming months.
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