YOUR PORTFOLIO
/ 2016 IN REVIEW /
TALES OF THE
UNEXPECTED
Daniel Lanyon looks back at 2016: a year that took
everyone by surprise
T
WO WORDS WILL
DOMINATE FUTURE
HISTORY BOOKS’
CHAPTERS on 2016:
Brexit and Trump. Of
course, the UK’s vote to leave the
European Union and the election
of Donald Trump as president of
the United States have not been
the only major events this year.
We also saw the spread of the
Zika virus, terrorist atrocities, an
intensification of the civil war in
Syria and a spate of celebrity
deaths.
Even without taking a position
on the divisive issues of Brexit
and Trump it was not difficult
for many commentators to label
2016 as one of the most eventful
years for decades and the hashtag
#worstyearever began trending
on social media before the
halfway point.
So how have UK investors
fared during this year of
political uncertainty? Actually,
surprisingly well.
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THE WORST
POSSIBLE START
A well-known maxim in the
world of investment says “as goes
January, so goes the rest of the
year”. However, 2016 has ended
with markets in stark contrast to
where they began. January saw
the worst opening to any year
as investors panicked over the
sluggish pace of global growth,
concerns about China, the price
of commodities and central
banks’ apparent inability to
manage any of these issues.
Circuit breakers were
triggered minutes after the
Chinese mar ket opened this
year, when a weakening yuan
sent equities down more than
7 per cent. This prompted a
major sell-off in global markets
as investors became more and
more risk averse, according to
Adrian Lowcock, investment
director at Architas.
“Linked to the bad start for
China was a collapse in oil and
commodity prices as investors
feared global growth was going
to slow down,” he said. “This
hit the mining and oil sectors
hard. However, both had already
suffered from falls in commodity
prices and concerns over their
finances in 2015 – and this has so
far proved to be the bottom.”
These sectors subsequently
spiked on a recovery in the
underlying commodities and the
feeling they had become oversold.
Brazilian equities also bore the
brunt of commodity weakness
early on and the country
had a political scandal of its
own to worry about with the
impeachment of its president
Dilma Rousseff. It quickly
rebounded, however.
Investment trusts focusing on
commodities and Latin America
were among the best performers
on average during the first
quarter of 2016. The IT Country
Specialists Latin America and
the IT Commodities & Natural
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