Mountstone create and manage bespoke investment portfolios for wealthy families, charities and trusts. CEO James Keen publishes a monthly investment update for their clients.
Mountstone Partners was three years old on the 3rd September 2015 – happy birthday to us. However we will not be basking in the glory of our continued existence, not least because this has been the worst quarter for equity markets since our inception.
You may recall how excited we were when the FTSE 100 first closed above the 7,000 mark back on the 9th April 2015. So excited in fact that I took a picture of the day’s closing value on my phone to capture and preserve the moment. However since then the FTSE 100 has plunged again back down through 6,000, reaching 5,898 on 25th August before re-bounding somewhat in October.
So what have been the major drivers of the recent decline in equities? In a word “China”. A surprise devaluation of the Renminbi on the 10th August in order to stave off the effects of a flailing economy took the markets by surprise and led to a plunge in equities across the globe. The impact was not so much related to the magnitude of the move (2-3%) but more the intention that it showed and the political significance. Entering a round of competitive devaluations with the US (currency wars, by another name) is not a decision to be taken lightly and the world judged this to be a panic move from a stuttering engine of world production.
This month we look back upon world events over the last extraordinary three years of our existence and consider what the future holds for equity and fixed interest investors over the years ahead.