3Q 2021 Market and Economic Overview

In the third quarter of 2021 the US Federal Open Market Committee indicated after its September meeting that tapering of asset purchases 'may soon be warranted', with purchases expected to end by mid-2022. The report said the US was expected to start tapering in November and the UK perhaps by the end of the year or early 2022, while the ECB was considering a substitute asset purchase facility. Government support through furlough and similar schemes was also coming to an end, and interest rates were expected to begin rising some 12 months after the end of quantitative easing.

Equity markets were mixed. The MSCI World Equity Index fell 1.45% over the quarter. US equities rose 0.23%, UK equities 0.70% and Japanese equities 2.30%, while German equities fell 1.84%, Swiss equities 2.51% and Chinese equities 6.85%. Inflation was 5.30% in the US, 3.00% in the euro area, 4.10% in Germany, 3.20% in the UK and 0.90% in Switzerland.

The report discussed the US federal debt ceiling, noting a possible government shutdown at midnight on 30 September and earlier episodes of brinkmanship since 1995. It also discussed energy supply, citing rising gas prices in the UK, rising electricity prices in Europe, factory shutdowns in China and rolling blackouts in California. On China, it described the 'three red lines' introduced in 2020 to limit borrowing by property developers: liabilities to assets of no more than 70%, net debt to equity of no more than 100% and cash to short-term debt of more than 100%. It said that Evergrande, with total debt of around USD 300 billion, stood at 82%, 204% and 47% on these measures at 31 December 2020.

In currencies, the euro fell 2.31% against the US dollar to 1.16 and sterling fell 2.57% to 1.35, while the dollar rose 0.71% against the Swiss franc to 0.93 and 0.15% against the yen to 111.27. Gold fell 0.74% to USD 1,756.66 and WTI crude rose 2.26% to USD 75.44.

Important information: This snapshot summarises MWC Group's market commentary for the period shown and is provided for general information only. It is not investment, tax or legal advice, a personal recommendation, or an offer or solicitation to buy or sell any investment, and it does not take account of your personal circumstances. Views and figures reflect conditions at the date of publication and may since have changed. Past performance is not a reliable indicator of future results. The value of investments and any income from them can fall as well as rise, and you may get back less than you invested. Exchange-rate movements can affect returns. Market data comes from third-party sources believed to be reliable, but its accuracy cannot be guaranteed. Please seek personal advice before making any investment decision. Issued by Manentia Wealth Consulting Group Limited (C80087), licensed by the Malta Financial Services Authority.