A 7% fall in the Shanghai composite overnight and a ratcheting up of tensions between Iraq and Saudi Arabia over the weekend, saw the FTSE 100 slump over 2% soon after the opening bell, a mood and a movement that was echoed on markets throughout Europe.
And, if that wasn’t enough of a bang, China’s equity market crashed by 7% for a second time on Wednesday, leaving investors with renewed worries over the possibility of a hard landing in China and the impact on broader emerging markets. It was also a severe test of the ‘circuit breaker’ mechanisms that had been installed at the end of last year in an attempt to limit volatility. So serious a test in fact that the mechanisms were scrapped.
Sticking with the theme of slumps, crude oil also continued its slide, falling to its lowest level since 2004 on Wednesday. As you will see from this week’s featured graph, the supply side of the oil equation has undergone a dramatic shift in recent year’s thanks to US shale production; a shift that means there are few people that expect the price picture to get much better anytime soon. Aberdeen Asset Management saw its stock slump too after Barclays said it had downgraded the stock.
If two 7% falls and a $35 per barrel oil price weren’t enough, the biggest story of the week on Portfolio Adviser was the announcement by Distribution Technology that it has entered the fund ratings fray. As advisers have to go to ever greater lengths to show proof of ongoing due diligence in terms of fund selection and clients increasingly demanding more in the way of performance, rating agencies are only going to grow in importance and it will be interesting to see how DT shakes up the landscape.
Speaking of shake-ups, after a report in the Sunday Times that acting head of the Financial Conduct Authority, Tracey McDermott, remained the front runner to fill the role more permanently, Chancellor of the Exchequer, George Osborne, told Radio Four’s Today show on Thursday that she has ruled herself out of the running. The news is just the latest episode in what has been a rather dramatic few months for the regulator and leaves the hunt for a new CEO wide open.
Other stories we liked
Gary Shepherd’s excellent profile of Aviva Investors CEO, Euan Munro, got readers clicking in order to find out exactly how he intends to wake the ‘multi-asset giant’. As did, Alex Sebastian’s analysis of the reasons why European equities remain top of the class in the eyes of most asset allocators and Geoff Candy’s examination of what could be in store for US equities.
A look at the top funds of 2015, also piqued readers’ interest, as did Old Mutual Global Investors CEO, Richard Buxton’s views on why ‘Brexit’ is one of the three biggest risks facing UK equity investors.
People Moves
Brewin Dolphin head of wealth and investment management, Stephen Ford, has left the firm, after it announced a major shake-up of its executive committee.
Skagen Funds’ head of UK wholesale Tim Gordon, who helped front the Norwegian asset manager’s entry into the UK retail space, has left the firm, having joined in 2011.
Peter Saacke has replaced Ruth Keattch as CIO at Artemis Fund Managers.
Chart of the week
And finally…
The more eagle-eyed readers may have noticed that while the crash and the bang promised in the headline have been delivered, the wallop has yet to be discussed. In fact there were a lot more than one in Ben Stokes’ innings of 258, in the second test against South Africa in Cape Town, the fastest 250 in test history. Happily, the South Africans managed a significant fight back including a well-deserved ton by Temba Bavuma, the first black player ever to score a test match hundred for the Proteas. All of which leaves the scene well set for the third test.
