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Ark Review of the Month

January 2024

Global Markets


The performance of various asset classes in January 2024 showed significant differentiation. Growth stocks outperformed, with a monthly increase of 2.1%, while value stocks only rose 0.3%. Developed market equities were led by the Japanese TOPIX Index, which increased 7.8% in January. The MSCI Europe ex-UK and US S&P 500 Indices rose 2.1% and 1.7% respectively. Emerging market equities, however, underperformed, with the MSCI Emerging Market index falling 4.6% and the MSCI Asia ex-Japan index falling 5.4%.


Global government bonds fell by 1.8% in the month, with US Treasuries falling 0.3%, German Bunds falling 0.6% and UK Gilts falling 2.4%. Global investment-grade corporate bonds also posted negative returns in January, despite tighter spreads. The strengthening of the US dollar put pressure on emerging market bonds, causing their prices to fall 1.2%. The European high-yield bond market, on the other hand, performed positively, with prices rising 0.9%.

As of 31 January 2024:

UK 10 Year Gilt Yield 3.80%
US 10 Year Treasury Yield 3.92%
Germany 10 Year Bund Yield 2.17%

UK Market

UK inflation rose 4.0% in 12 months to December 2023, with tobacco and alcohol prices the biggest contributors, mainly due to an increase in tobacco tax. Most economists expect inflation to ease in 2024, as energy prices fall and consumer and food inflation rates decline. Household energy prices are expected to fall in April 2024. However, recent disruptions to shipping traffic in the Red Sea and Suez Canal could also push up prices for some products.


This year is a general election year in the UK, with the election likely to take place in the second half of the year. Opinion polls show that most people believe that the economy is one of the most important issues the country is facing right now. The UK government's borrowing is currently lower than expected, with lower debt interest payments, increasing the possibility of tax cuts. The Prime Minister and Chancellor of the Exchequer have both expressed that they want to introduce more tax cuts shortly, with the next possible opportunity coming in the Budget on 6 March.

Ark Insights

In our previous monthly insight, we mentioned our focus on Japanese assets in 2024. For decades, the Bank of Japan's ultra-loose monetary policy has artificially suppressed borrowing costs, dampened market volatility, and to some extent discouraged foreign investment. However, as inflation has finally broken through the central bank's target and global market pressures have mounted, the situation is reversing. Expectations of rising interest rates in Japan are injecting new vitality into Japan's financial ecosystem. The benchmark Nikkei index has surged to a 34-year high, and bond trading volumes have surged. The job market is also opening up to seasoned traders who experienced the boom years of the 1990s trading market.


This shift has also attracted the attention of international investors. As investment patterns in other parts of Asia may have changed, foreign investors see an opportunity to earn higher returns in the Japanese government bond market. More international funds could flow into Japan in the coming period. In addition, Japanese capital that once fled the country in search of high-return overseas investment in the negative interest rate era could also return, further adding liquidity and vitality to the Japanese capital market.


As always, our Investor Relations team would be more than happy to help you with any queries.


The views expressed in this update are not intended as an offer or solicitation for the purchase or sale of any investment or financial instrument. The views reflect the views of Ark Investment Management at the date of this document and, whilst the opinions stated are honestly held, they are not guaranteed and should not be relied upon and may be subject to change without notice. Investments entail risks. Past performance is not necessarily a guide to future performance. There is no guarantee that you will recover the amount of your original investment. The information contained in this update does not constitute investment advice and should not be used as the basis of any investment decision. Any references to specific securities or indices are included for the purposes of illustration only and should not be construed as a recommendation to either buy or sell these securities or invest in a particular sector. If you are in any doubt, please speak to us or your financial adviser as appropriate.

Issued by Ark Investment Management Ltd which is authorised and regulated by the Financial Conduct Authority. 

© Ark Investment Management Ltd. Registered in England & Wales with the company number 09281759.

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