Risk On. “Global synchronous recovery” seems to be the financial community’s mantra for 2017, used to ward off evil spirits associated with a tightening monetary policy, especially in the US. Although Balkanization and climate change across the globe pose great long-term threats, their symptoms, Charlottesville, Catalonia and (possibly) the severity of Hurricanes Hugo and Irma, resulted in only short-term market volatility and, thus far, prospects for tax cuts has certainly trumped (pun intended) the threat of a nuclear strike from North Korea.
Geopolitical events and hurricanes created noise and volatility, yet global property securities deliver positive returns for a third consecutive quarter with performance dispersion in markets and property sectors. Synchronized global growth appears to be a theme that has gained momentum this year, but with the pace and direction of economic growth quite diverse and restrained inflation a worry for some, it may soon put central banks in a delicate position as some begin the process of tightening monetary policy. Europe again delivered the highest total returns as its economic recovery continues despite periodic bouts of political uncertainty. The logistics sector remained among the most favored globally, while investor worries for the retail sector persisted. The broader equity markets continued to outperform both property securities and bonds as investors favored exposure with greater sensitivity to an improving global economy and worries of higher interest rates remained.