Alas, it’ s currently really difficult to view the UK as an exciting place to invest and, with recent reports showing that inflation is again on the rise, it feels as though we’ re just at the precipice of a problem ourselves.
be revived. However, given the amount of individual wealth held by US nationals in the US stock market, the keenness of the sting that they would have felt from the price of goods going up due to tariffs has been replaced by the keenness of their personal wealth falling- some to the tune of about 15 % depending upon where they are invested. 2025 is shaping up to be an interesting year after a decent bounce back and you still can’ t count the US out, even if some are trimming US exposure to place in other developed markets.
China
The Chinese stock market is such an interesting place- you can never really tell whether it’ s doing well because of the performance of individual companies or whether it’ s the news flow from the Chinese government announcing stimulus. Even if it is the latter, it still needs to actually land, so seeing a stock market rally based on a promise can be quite dangerous. Now, that doesn’ t mean to say that there isn’ t opportunity in China and the emerging market, however, it does mean you just need to look very closely at the exact reason that these things are happening.
No, I’ m not a huge sceptic, but I do also know that growth numbers can be fiddled and it’ s possible to make growth numbers look a lot more attractive over a period of years, if there’ s a benefit. For example, let’ s say you looking at the growth of the number of bridges year on year in a particular area, and let’ s say that more bridges mean more growth. Now, instead of counting how many bridges are in one area, you start reporting on how many bridges are built year on year. So, you destroy the first bridge to make a better bridge in year one, and in year two you decide that this bridge is no longer fit for purpose, so you knock it down and build it again. You repeat this process in year three, four, and five. What you’ ve done is destroyed and rebuilt the same bridge five times, so there’ s still only one bridge. However, if you were reporting on how many bridges are being built every year in this area you would report that there have been five new bridges in five years and that growth is great.
If you extrapolate this trend across 1000 areas in hundreds of different sectors over the course of two decades, starts to paint a really interesting picture. Unless you can trust the data that you’ re getting, it always helps to act with a bit of scepticism.
I’ m not suggesting that this is entirely the case across the board when it comes to Chinese equities, and there are definitely areas in which it’ s worth investing, however you have to trust the experts on what that looks like, and hope that the experts can separate fact from fiction on our behalf. In the meantime, the Hang Seng can hold onto its 28 % performance year to date, and we’ ll all breathe a sigh of relief that diversification has played its part in keeping our wealth slightly buoyed.
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