Opportunity knocks here and abroad

TIME to consider buying in the UK, US and Japan.

The UK, as our “home” market, tends to be the biggest single element in most balanced portfolios.

Lately UK equities have been something of a laggard, held back by the bounce in sterling and not at the centre of the Trump reflation story, so not a bad time to top up.

It might also seem an odd moment to be adding to US equity positions just as they hit all-time highs, but, whatever one might have thought beforehand, Donald Trump’s election is a potential game-changer.

Austerity is behind us and growth is sweetened by the prospect of corporate tax cuts. Moreover, President-elect Trump’s policies are very US-centric, and America is better placed that most countries to respond to some stimulus.

The banking sector is largely recapitalised and healthy; consumers have shed a good portion of their debts; and there are few signs of excess in the economy. If something bad happens elsewhere in the world, the US has a better cushion to fall back on.

Of course, if “boom” is back on the agenda, then its counterpart “bust” will probably appear at some point in the future, but that’s a bit like worrying about the hangover before one has enjoyed the party.

Japan too has done well. A weaker yen has helped, and Japan is weighted towards companies that benefit from a stronger global economic cycle. Like the US, but unlike Europe, its banks are in decent shape.

However, I wouldn’t want to leave the impression that we are in any way gung-ho about the investment outlook.

Europe’s political situation remains uncertain; Brexit is a wild card;, Trump might ruffle some diplomatic feathers a little too vigorously; we haven’t had a good China growth scare for almost a year,;and rising bond yields could yet cap, or even reverse, the performance of riskier assets.

Investing is never a sure thing. John Wyn-Evans is head of investment strategy at Investec Wealth & Investment