Market turmoil presents challenges and opportunities

‘May you live in interesting times’ is an oft-quoted Chinese proverb of uncertain provenance that could be easily applied to the recent market turmoil that originated in China. Supposed triggers for the recent decline included the capital gains tax proposal in China, comments about a recession by former US Federal Chairman Alan Greenspan, weak numbers for durable orders in the US and the potential threat from the unwinding of the yen carry trade. The coming together of these events arguably caused them to have a greater impact than they might have had in isolation.

“The possibility of a sudden downdraft remains with us. What has not changed is that economic growth appears to be intact - we had better confidence numbers out of Europe recently - and earnings continue to be robust,” according to Neil Rogan, Head of Global Equities and Manager of the Gartmore Global Focus Fund and Gartmore SICAV Global Focus Fund.

“The Gartmore Global Focus Fund has shown it can outperform in down markets as well as in up markets, and, if there were a marked recurrence of the latest jitters, we would expect a similar outcome. In the recent market declines, two of our tactical positions fell through their stop and, being true to our process and sell discipline, we sold them, as the stories had not improved. The stocks in question were TNT and Freeport-McMoRan. The cash raised was re-invested in some strategic holdings - Telstra, Apple and Phillips. As stock pickers, we will continue to search for great ideas that are now somewhat cheaper.”