(Alliance News) - Ruffer Investment Co Ltd on Monday said June was a positive month for global equities but a "frustrating one" for the company.

"Markets have increasingly tried to consign 2022 to history. A bad dream, but no more. The prospect of a recession has led to a belief that rates might come down as quickly as they have risen. Supported by plentiful liquidity, stability has dominated. We have been more worried about the potential for instability," the London-based investment company said.

Ruffer said the path of stability would necessitate the continued strength in the "real economy". This would be largely predicated on the continued recovery of the Chinese economy, the company felt.

"This led us to focus our growth assets on both commodities, and equities more geared to the real economy. So far, this has not been the case, commodities have created a further headwind. Equally, whilst our equities have contributed positively, this has not been sufficient to offset the cost of protection," it said.

Ruffer noted that the impacts of tighter monetary policy were starting to be felt, already having consequences. It added that this backdrop would also "inevitably and intentionally" slow the economy.

"Despite this obvious risk, markets remain certain the risks will be contained. Investors are now willing to buy into equities (and indeed corporate credit) despite the fact they now offer a lower return (and higher risk) than cash! We are increasingly taking the other side of this perceived certainty," the company said.

"We are less convinced. Taking a cautious view can be painful, but history tells us that not long after these periods the risks emerge, leading to significant drawdowns in markets."

Shares in the firm were down 0.2% at 268.00 pence on Monday morning in London.

By Heather Rydings, Alliance News senior economics reporter

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