My Fund Comparison
At a Glance: The Global Market Outlook
• Global growth should remain healthy and inflation is expected to pick up gradually
• While the market narrative has moved on from secular stagnation, downside risks still persist
• As a value investor, attractive sectors at this point in time may be emerging markets, which look attractive relative to developed markets
Western Asset’s portfolio manager Mark Lindbloom and Aberdeen Asset Management’s head of global banks Rennie McConnochie weigh in on the global market space for the remainder of 2017 and provide their outlooks for 2018.
Q: How is the global market performing and what is your outlook for 2017?
Lindbloom: “Globally, growth continues to improve and we are encouraged by this, but we must be cognizant that this growth is occurring at very subdued levels from a historical perspective.”
McConnochie: “At Aberdeen, we believe that global growth should remain healthy and inflation is expected to pick up gradually.”
Q: How does this growth compare to years prior?
Lindbloom: “Global inflation, which is increasing, began this current path higher from a low level where markets feared the potential for deflation. The lack of inflation in the market has been an offset to growth and one that we must be very thoughtful of.”
McConnochie: “Our forecast for 2017 global GDP growth of 3.5%, up from 3.1% in 2016, reflects strengthening global trade across a number of regions.”
Q: How would you gauge risk in the coming months and what other challenges and opportunities lay ahead?
Lindbloom: “While the market narrative has moved on from secular stagnation, downside risks still persist, particularly as central bankers globally try to move from the historic accommodative stance they have today towards one that is supportive, but less accommodative.”
McConnochie: “We feel as though growth still looks likely to pick up in 2018, reflecting a modest fiscal boost, but the risks are tilted to the downside. The global upturn also remains vulnerable to moderating Chinese growth and to a slippage in commodity prices.”
Q: Any final thoughts for readers?
Lindbloom: “We continue to project spread product to outperform treasuries in the low, slow global growth environment discussed above, but many credit markets – including US Investment Grade and High Yield – are at levels we haven’t seen since the summer of 2014. As a value investor, the sectors we find most attractive at this time are select emerging markets, which look attractive relative to developed markets.”
McConnochie: “Beneath these headlines, there are some nuances in today’s global markets; we look forward to sharing our latest insights at the upcoming CEFA Advisor Summit in Chicago.”
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