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Global Recession or Golden Opportunity?

If you already hold equities (shares, bonds, stakes etc.) then be prepared to see a downward turn in your portfolio this month…China´s position has seen ALL markets worldwide follow a downward trend, but fear not, and DO NOT PANIC, for many this could prove to be a blessing in disguise – withdrawing funds is not the answer.

Commodity producing countries such as Brazil are certainly suffering because of low prices but many other parts of the world are better off, seeing lower input costs in manufacturing. Lower oil prices are also resulting in lower diesel and petrol prices, boosting disposable incomes for consumers. It is widely believed that the US will be the first major economy to raise interest rates with much commentary centered around September as the likely starting point. However, the recent further fall in the oil price suggests that inflation levels will remain subdued for the foreseeable future.  Nevertheless, even if rates were to rise next month, it is likely to be a token increase, with subsequent movements very slight indeed. In the UK, inflation is also conspicuous by its absence and any moves seem unlikely until well into next year.

So what does all this mean for YOU?  Share prices have suffered a very sharp correction in the last few weeks, albeit after many stock markets reached all-time highs in the Spring. Valuations are around the average for the last twenty years, so the current weakness offers a great entry point. Moreover, dividend yields remain well above government bond yields, underlining the income attractions of equities. Low commodity prices are likely to keep the lid on inflationary pressures, removing the need to raise interest rates. This suggests that bond yields are likely to remain low for some time. Therefore, while stock markets may remain volatile over the coming months, investors shouldn´t be afraid of taking advantage of the recent dip in prices to add to positions where they can.  

In layman´s terms, if you have cash in the bank with an expected low yield, and you are not in any rush to utilise the funds, then there has never been a better time to consider investing medium to long term in the equities markets, with products available that have potential to achieve returns in excess of bank interest rates.   

This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.

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McGregor had such a profound impact on the Cayman Islands wealth management sector that it is now home to the world’s fifth largest banking sector while also at the forefront of the expat financial services industry; with both Blacktower and Rothschilds having offices in the British Overseas Territory. It is also ranked as the world’s second leading tax planning destination, behind only Luxembourg and, in testament to the work of McGregor, has the highest standard of living in all of the Caribbean.

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AROUND THE BRANCHES: Living and Working in the Netherlands

Girl with Netherlands flagThe United Kingdom finally left the European Union on 31 January 2020. As such, the two jurisdictions are now in the process of implementing the Withdrawal Agreement, with the transition period ending at the close of 31 December 2020.

This means that in the short-term, nothing really changes for UK expats in the Netherlands – they will continue to enjoy the protections and freedoms of EU regulations, including, crucially, freedom of movement and the right to work and study in the country. Find out more about how Blacktower can help you during Brexit, here.

However, following the end of the transition period – i.e. after 31 December 2020 – UK nationals and their family members who live in the Netherlands will require a residence document. This should be arranged through the Immigration and Naturalisation Service (IND), which, in theory, will be sending letters to all UK nationals in the Netherlands detailing how they can apply online.

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