Investment Strategy - Lower growth ahead

News item -

Economic growth has slowed and business confidence has fallen, although the main confidence indicator is still consistent with decent growth. Europe and emerging markets, in particular, have suffered, while the US economy continues to power ahead, based on the stimulus provided by the Trump administration’s lower corporate tax rates and business-friendly policies. In Europe, relatively moderate growth is expected, while core inflation will likely continue to undershoot the ECB’s 2% target.

Since October, stock markets around the world have been hit with an increase in market volatility and a decline in risk appetite. The relief rally after the US midterm elections in early November did not last long. The third-quarter earnings season, which has just concluded, was relatively positive. Over 90% of the companies in the S&P 500 Index have published their quarterly results, and more than 80% of the results were better than expected.

At today’s meeting of the ABN AMRO Investment Committee, it was decided to maintain the preference for stocks over bonds. Within alternative assets, commodities are favoured, while a neutral stance is taken to hedge funds and real estate. The Committee also decided to increase the existing allocation to hard-currency emerging markets debt from cash.

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