climb as risk appetite returns

上一篇 / 下一篇  2018-03-21 16:16:46 / 個人分類:健康

The global economy will enter a mild inflationary environment and market volatility is expanding.

CliveMcDonnell(head of equity investment strategy division, standard chartered bank)

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We are entering a new phase of rising inflation and rising market volatility. Investors should be prepared to pay more attention. The ideal economic momentum in 2017 will gradually shift to a reinflation environment in 2018.

The ideal economic environment is good for global asset markets, where inflation remains low and market volatility is narrowing, pushing up returns in recent years. The s&p 500 index, which measures volatility in the stock market, is at a cyclical low of 9.1 on November 1, 2017, and is between 10 and 15 most of the time. Market volatility, however, in February 2018, sharp rise to 37, we believe that the market volatility has stepped into a new stage, we expect volatility index in 2018 will be between 15 to 20.

The us core consumer price index, which reflects inflation, also rose from a low of 1.7 per cent to 1.8 per cent in August 2017. Of course, while inflation will continue to rise, we believe that structural factors such as demographics and job insecurity may limit the extent of their rise.

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A modest rise in bond yields, coupled with a widening market volatility, would have a big impact on investors, which suggests that the ideal environment for global equity and bond markets is over. We are convinced that the economic cycle is now in the reinflation phase, where stocks tend to perform. well.

In the market shift, there is a key positive: the dollar's weakness. Asian markets outside Japan and emerging markets outside Asia are often the biggest beneficiaries of a weaker dollar. The weakness of the dollar has had an impact on emerging markets, as local policymakers tend to control the excesses of the goods. Local central Banks often issue money to buy dollars to control the value of their currencies, so local liquidity will increase. Although the local government can absorb some of the money supply by issuing bonds, in general, a weak dollar will increase liquidity in the local market and reduce interest rates.

We remain bullish on the stock market, where investors can allocate stocks higher than the benchmark. In global markets, Asia (except Japan) is our most promising market, the reason is that earnings growth of 13% in 2018, 2018 p/e ratio of prediction in 13 times more reasonable valuation levels, and positive effect of a weak dollar. In Asia (except Japan), China is our favorite market. What makes us optimistic about China is financial deleveraging, which reduces the risk in the financial sector and increases the southbound capital of the shanghai-hong kong stock connect. It now accounts for 15% of the hang seng index's turnover, up from 10% last year. At the same time, earnings growth of 15 per cent in 2018 is attractive.

The impact of the shanghai-hong kong stock connect on the Hong Kong market, particularly in Hong Kong, should not be underestimated. Chinese investors have been bullish on financials and technology stocks, and have focused on companies that the a-share market can't get into. We expect to see a steady rise in the hang seng index in the coming years. A faster appreciation of the yuan is a major risk, or it will hurt Chinese investors' interest in overseas listed shares because the currency exchange will take their toll.

In a new phase of inflation and market volatility, bond investors need to adapt to this shift, as the returns on government bonds are likely to fall. We still believe that bonds are the core investment of investors and can be configured with a baseline level. We prefer emerging market dollars and local currency bonds. Among the factors that support these bonds are the effect of higher yields as a result of higher earnings premiums than treasuries. A recovery in commodity prices is an important driver of emerging market dollar bonds, while a weak dollar is good for local currency bonds.

Looking ahead, investors need to prepare for a new phase of "reinflation". While global equities are doing well at current valuations, and emerging market bonds have a positive return, investors should be wary of big swings in the market .


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