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Global Equity Income Portfolio: January 2023

Global equities had a strong January with the FTSE All World high dividend index increasing 4.9% during the month. Led by the continued expectations for economic recovery in China Emerging market equities performed particularly strongly. After the end of the zero Covid tolerance policy the Chinese population has larger than historical savings. An economic rebound in the nation should be favourable for regional trade. Inflation expectations moderated during the month providing investors with the hope that monetary policy may become less restrictive than previously thought. The prices of several classic growth stocks that had seen large reductions during 2022 rebounded significantly.

The Global Equity Income Portfolio returned +1.7% in January. The best performing positions held in the month were AT&T (+12.3%), Samsung Electronics (+11.5%) and VW (+11.0%). Having provided some resilience in 2022 more defensive sectors pf healthcare and consumer staples performed relatively poorly in January. Johnson & Johnson (-7.5%), provided a slightly disappointing, but not unexpected, update on their controversial defence for historic talc contamination. Coca-cola (-3.6%) and BAT (-3.5%) were also negative.

No new positions were added or sold in the month.

Despite redundancy announcements by technology companies in the US, unemployment remains low, and inflation remains elevated. On the first of February the Federal Reserve raised interest rates and their report continued to indicate an intended reduction in liquidity. January might therefore be more of a classic mid-bear market rally than optimists would like to hope. As a reminder, equities are long term investments and with shares generally now trading on lower multiples, expected returns over the long term are improved from this time last year.