Prosperity reigns but let’s hope it continues

EVERY day we seem to wake up to more bad news – the latest upheavals in the White House, inconclusive Brexit negotiations, populist outcry in any number of countries and missile tests in North Korea to name but a few regular headlinemakers.

And yet the last six months has been another period of prosperity for investors, with equity markets making several new alltime highs and volatility remaining low apart from a couple of short spikes – a classic case of what is described in financial circles as “climbing a wall of worry”.

Perhaps the biggest threat to investors (and, indeed, the whole global population) is the possibility of some sort of war breaking out which involves North Korea. Whether it or the United States is the aggressor, the potential loss of life does not bear thinking about, even before we get around to trying to assess the economic implications.

With Japan and South Mike Swift (centre), area director for HSBC, with Jamie McCullough (left) and Mark Watson, who have been appointed corporate banking relationship directors for South and West Yorkshire Korea in the firing line, and weapons that can, apparently, reach the west coast of America, Kim Jong-un presents a worryingly credible threat.

However, he must also know that his own country would be obliterated if he shot first.

To a great degree, we have to assume that the concept of Mutually Assured Destruction will keep all the players honest, much as it did during the Cold War.

More optimistically, if none of these threats come to pass, the outlook for riskier assets remains reasonably positive as global growth continues and sovereign bonds offer little in the way of competition for asset allocation.

The underlying outlook suggests that company earnings can continue to grow, and, if combined with dividends, holds out the promise of positive returns for equity investors, even if not on the scale of past returns.