The Investment Outlook introduces you to investment insights of ABN AMRO Private Banking. Our experts share their views on macroeconomics and investment opportunities around the globe, across equities, bonds and alternative asset classes.
Growth connectors in 2017
This is the annual investment outlook for 2017. We identify a time of momentous change that is accelerating the transition toward improved economic prospects.
The new Republican administration in the US is providing a fresh impulse to the US, as economic policy is reconnected with a simple, effective growth agenda. We believe it will have positive implications worldwide. With higher growth and inflation, the US Federal Reserve will likely take decisive steps to increase interest rates. While the old, post-World War II globalisation of trade may be stalling, it leaves room for new trade, based on global digitalisation. This type of globalisation is introducing a new economic order, with opportunities for individuals, entrepreneurs and investors.
The growth potential being unleashed should benefit cyclical equities, but bond yields are at risk of rising. Equities are our most favoured asset to generate investment returns. They are well placed to benefit from a positive cyclical upswing as well from the structural changes ahead. The US dollar should also benefit.
Of course, with rapid change comes risk. In the US, risk is now linked to the implementation of the new administration’s policies. In Europe, three of the most important EU nations are facing elections in 2017. This is delaying the delivery of fiscal stimulus and maintaining reliance on the European Central Bank for growth.
At the same time, higher inflation is a challenge to preserving capital, as the low yields left over from almost a decade of monetary policy stimulation leave little margin for error.