Turbulent predictions generate caution
Global investment manager, Standard Life Investments has warned investors they should remain cautiously positioned amid the likelihood of continued turbulence in the coming year.
Releasing its latest Global Outlook, Standard Life said the political risk premium remained high in all financial assets, against the backdrop of difficult questions to be answered about how major economies deal with inflation or deflation, regulation or deregulation, or the role of the state in relation to the financial system.
"Standard Life Investments believes that one of the key consequences of 2011, with its series of major events and crises, may well be that investors have to operate against a background of elevated risk premia for some time, as there is little prospect of one of the key sources of uncertainty, namely politics, resolving itself before the end of 2012," the Outlook said.
It said the company therefore expects the coming year to be characterised by more of the same, as markets struggle to transition to a new return environment that, one day, may be regarded as normal.
Discussing the analysis, Standard Life Investment global head of strategy Andrew Milligan said the house view remained cautiously positioned, focused on sustainable yield opportunities.
"We still expect the business sector to deliver earnings growth of around 5 to 6 per cent globally this year," he said. "Our analysis indicates a noticeable decline in top line revenues, but given the strong control of labour, interest, tax and depreciation costs, we forecast margins can be maintained around current levels."
Standard Life Investments expects Europe, Australia and emerging market central banks to cut rates further in coming months.
Recommended for you
The new financial year has got off to a strong start in adviser gains, helped by new entrants, after heavy losses sustained in June.
Michael McCorry, chief investment officer at BlackRock Australia, has detailed how investors are reconsidering their 60/40 portfolios as macro uncertainty highlight the benefits of liquid alternatives.
Having reset its market focus to high-net-worth advisers, Praemium’s administration solution has been selected by Bell Potter in a deal that increases the platform's funds under administration by $6 billion.
High transition rates from financial advisers have helped Netwealth’s funds under administration rise by $3.7 billion in the fourth quarter of FY25.
