Still room for improvement: "Investors underestimate the upswing"
Who would have thought that in the eurozone countries, the economy is growing faster than it has been since 2011, and even in emerging markets, the economy seems to be self-sustaining.
However, the longer the cycle lasts, the more investors fear its end - and not altogether unfounded: the output gap of the G7, ie the difference between actual production and economic potential, is shrinking. Meanwhile, not only in Germany, the United Kingdom and Canada, but also in the United States is almost full capacity.
However, if the economy grows just above the trend, economies can still outpace potential growth for a long time before they reach their zenith. That's what our analyzes have shown. Sufficient spare capacity in Europe also shows that industrialized countries still have a considerable output gap. We therefore believe that we are still years away from the peak of the economic recovery.
Global recovery supports emerging markets
In particular, Japan and Asian emerging markets may find it difficult to repeat the surprisingly strong 2017 earnings growth in 2018. However, the steady global upturn, firm trade and stable commodity prices should help the region. The chart below illustrates the recovery in oil and commodities in 2014 and 2015 and shows that emerging markets still have catch-up potential.
A slight economic slowdown in China could, in our view, easily put off emerging markets. We also see growth momentum as many emerging markets are in earlier stages of the upswing than the developed world.
Brazil and Russia have left the recession behind, India is recovering from the growth slowdown caused by reforms. This should give tailwind for equities. For emerging market bonds, we expect coupon-like market returns. The reason: The encouraging factors of 2017, such as low US interest rates, weak US dollar, growth acceleration in China and monetary easing in emerging markets are reversing or ebbing away.
Nordea with Outlook for 2018: Three graphics that investors should know
No, it's definitely not pink glasses that Witold Bahrke, senior macro strategist at Nordea Asset Management, has on his nose right now. Rather a factual-sober. He advises caution and explains in his outlook where the journey is going in the new year.Continue reading
Outlook 2018: In Japan, profits and prices are rising
Because Japanese companies will earn 15 percent more, investors with shares of the island nation 2018 can achieve a yield of 5 to 10 percent. This predicts Peter Jenkins, Japanese equities expert at Nomura Asset Management.Continue reading
Grafik des Tages: Portugal-Anleihen überraschen mit Aktien-Rendite
"Portugiesische Staatsanleihen erzielten in 2017 eine Wertentwicklung, die man sonst nur Aktien zutrauen würde", berichten die Analysten der Deutsche Asset Management. In einer aktuellen Infografik zeigen sie, warum Investments in Staatsanleihen nicht langweilig sein müssen.Continue reading