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Investors To Face Opportunities in 2018 Due To Disruptive Trends

Investors To Face Opportunities in 2018 Due To Disruptive Trends
According to PineBridge Investments (PineBridge), a leading global investment manager, in 2018, opportunities would be generated by disruption right through the global markets and asset classes. This was revealed in the firm’s outlook for opportunities and risks for investors in 2018 in its annual Global Investment Outlook.
"Following years of false starts for growth in the global economy, we expect many markets to reach a high point in 2018.  For the first time in five years, growth will be above long-term averages. In our view, this environment will not benefit all assets equally, requiring investors to be both active and selective to make the most out of their portfolios," said Greg Ehret, CEO of PineBridge. 
"Heading into 2018, we are seeing disruption of all kinds create opportunities in markets.  As investors and stewards of our clients' long-term obligations, we have a responsibility to stay ahead of the latest market challenges and provide timely insight into these opportunities," Ehret said.
The last sustained period of combined global growth was ended by the financial crisis of 2007-08. That synchronized growth would be experienced by the world economies again for the firt time in 2018, claims the report.
There would be continued growth in Europe which saw surprised growth in multiple economies, predicts the economics team, despite some threat of political instability. at the same time, the fundamentals of the emerging market are enhancing and Japan is reaping full advantage of the stronger global growth. Global GDP forecasts are now enhanced and stands at 3.6% for 2017 and 3.8% for 2018.
US is now being predicted to record a GDP growth of 2.3% in 2017 and 2.7% in 2018 while that in Europe is predicted to be 2.4% in 2017 and 2.3% in 2018. The GDP growth rate for Asia is now pegged at 5.7% for 2017 and 5.6% for 2018.
"We favor growth assets – asset classes like equities, developmental real estate, and timber – whose cash flows will be enhanced by the accelerating global economy. We see two sectors that are particularly strong beneficiaries of reflation: financials and technology, and we also like small-cap and value stocks," said Michael J. Kelly, Global Head of Multi-Asset.
"Expectations are also ripe for disruption. Today's consensus believes that China is about to experience a big slowdown. Not us," added Kelly.
There are predictions for mild but steady headwinds in 2018 and beyond, replacing the tailwind prevalent now in fixed income markets, according to the PineBridge report. 2018 would be a year of transition from expansion to contractions even as there would be collective expansion of the global central bank balance sheets. This means that there would be a regimen of normalization of inflation and a stage where there would be more shifting and volatility in interest rates.
"In this environment, we see the best opportunities in higher quality credit risk in more nontraditional areas of fixed income – the areas where portfolios tend to be underinvested. These include components of emerging markets debt, tranches of collateralized loan obligations (CLOs), and more dynamic opportunistic credit," said Steven Oh, Global head of Credit and Fixed Income.
"The good news for equity investors is that company fundamentals are turning up.  For the first time in the last nine years, earning expectations are solid and improving, most notably and recently in Europe, Asia and Japan," said Anik Sen, the Global head for Equities.

Christopher J. Mitchell

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