At the beginning of the year China set out a modest 5% growth target for 2024. The same as the target for 2023, which they just achieved, but is well below historic growth targets. 5% growth is on the low end for China, but it’s well above the rate in developed economies like the US and UK.
Going into the final stretch of the year, the Chinese economy looks like it’s fallen behind. In Q3 the Chinese economy grew 4.6% just behind the 4.7% in Q2.
This article isn’t personal advice. If you're not sure if an investment is right for you, ask for financial advice. All investments and any income from them can rise and fall in value, so you could get back less than you invest. Past performance isn’t a guide to the future.
China’s stimulus plan
China have had some issues since the pandemic that have slowed growth. A property sector slowdown has led to low consumer confidence. Consumers have held back on their spending, leading to an economic slump.
It’s been so bad that while the rest of the world has been struggling with inflation, China is battling deflation. This is where prices fall instead of rise. Deflation puts more pressure on consumer and business spending as purchases are often delayed on the expectation of prices falling further.
This led to Septembers announcement from China’s central bank of their biggest stimulus package since the pandemic. This included government funding to help boost the stock market and share buy backs. They also announced lower interest rates and encouraged lenders to lend more by lowering the capital reserve requirement.
In response the Chinese stock market rose over 20% in just a week. But the excitement was short lived and the market has since given some of those gains back.
The consensus is that despite the stimulus package, more is needed to hit their growth target. With Q3 growth still behind target the current package just isn’t enough.
The concerns appear to have been listened to as the Chinese central bank again cut interest rates in October. This was the biggest reduction in their history and focused on supporting households.
The jury is out on if this is enough to get on track. But what it does show is that the central bank in China will continue to support the economy if they need to, and this could lead to more support in future.
Trumps threat of US tariffs
The Republican candidate Donald Trump has won the race for the White House and tariffs were a hot topic during his campaign. Trump has said he intends to issue 20% tariffs on all US imports and 60% on Chinese goods. Democrat candidate Kamala Harris also backed higher tariffs but to a lesser degree.
The International Monetary Fund (IMF) has expressed concerns on these kinds of sweeping tariffs. They believe it could lead to tit-for-tat moves that would damage global growth. Forecasts from the IMF suggest it could wipe 0.8% of economic output in 2025 and 1.6% in 2026.
How have global stock markets performed?
Global stock markets have seen positive results for the 12 months to the end of October.
Over the past year, the broader global stock market has risen 25.91%*. As always though, past performance isn’t a guide to future returns.
The US stock market performed the best returning 30.27%.
The Indian stock market has also performed very well returning 26.51%. It’s seen rapid growth over the last year and retained the title for the world’s fastest growing economy. The IMF had expected India to grow 7% in 2024. Slightly lower than in 2023 but still ahead of peers like China.
The Mexican stock market was one of the worst-performing stock markets returning -7.22%.
From a sector level, the technology sector performed the best, returning 40.32%. It’s benefited from advancements in artificial intelligence (AI) and the opportunities it might create. Energy stocks lagged the wider market, returning 1.68%%.
One-year stock market performance
How have our Wealth Shortlist funds performed?
Global funds on the Wealth Shortlist delivered mixed performance over the past year, with some faring better than others.
During 2022, funds investing in companies undergoing a turnaround or those focused on paying a dividend(or ‘value’ funds), generally performed better.
But in 2023 the market rotated and those investing in companies capable of above-average earnings growth (or ‘growth’ funds) typically performed better. Companies that are deemed to be beneficiaries of advancements in AI performed very strongly over the year.
2024 so far has seen a mix of growth and value stocks doing well. This has tended to be seen as good news for stock pickers looking to find the best opportunities they can.
A year is a short time to assess the skills of a fund manager though. Managers with different strengths, styles and areas of focus will perform differently over time.
Investing in funds isn't right for everyone. Investors should only invest if the fund's objectives are aligned with their own, and there's a specific need for the type of investment being made. Investors should understand the specific risks of a fund before they invest, and make sure any new investment forms part of a long-term diversified portfolio.
For more details on each fund and its risks, please see the links to their factsheets and key investor information below.
Artemis Global Income
Artemis Global Income has been the best-performing fund in the global sector of the Wealth Shortlist over the past 12 months.
Managed by experienced investor Jacob de Tusch-Lec, the fund returned 31.32%* versus 19.10% for the IA Global Equity Income peer group. But remember, past performance isn’t a guide to future returns.
We like de Tusch-Lec’s contrarian approach to investing, but it can lead to the fund investing very differently to its peers.
Our analysis suggests de Tusch-Lec’s stock selection has been the main driver of returns over the past 12 months. In particular, selections in Europe and Japan, as well as investments in industrials, have all benefited the fund’s performance.
The fund can invest in smaller companies as well as emerging markets which can increase risk. The manager can also use derivatives which if used increases risk. Charges are also taken from capital.
Troy Trojan Global Income
The Troy Trojan Global Income fund was the weakest performing fund in the global sector of the Wealth Shortlist returning 11.49% over the past 12 months.
James Harries, who manages the fund, has a stellar long-term record in protecting investors’ money. Harries' focus on high-quality companies and a more conservative investment approach means we expect the fund to hold up relatively well when markets fall.
In contrast, we expect the fund to lag the peer group when markets rise quickly. This has been the case more recently with markets rallying, particularly in the US and in the technology sector.
We still rate the team’s disciplined investment approach – it’s been used across a range of funds over the years with good outcomes. The fund can invest in emerging markets which can add risk as well as use derivatives. The fund can also be concentrated meaning a few stocks can have a greater impact on performance but this approach also adds risk. Charges are also taken from capital.
31/10/2019 To 31/10/2020 | 31/10/2020 To 31/10/2021 | 31/10/2021 To 31/10/2022 | 31/10/2022 To 31/10/2023 | 31/10/2023 To 31/10/2024 | |
|---|---|---|---|---|---|
Artemis Global Income | -9.65% | 36.77% | 4.52% | 2.55% | 31.32% |
Trojan Global Income | -1.54% | 16.16% | 6.97% | -3.37% | 11.49% |
IA Global Equity Income | -5.27% | 28.01% | 0.39% | 4.08% | 19.10% |
MSCI AC World | 5.50% | 30.04% | -4.25% | 5.37% | 25.91% |