2021 to be 'more wow' for markets
Markets will see “more wow and less worry” over the next few years, according to Longview Economics, as it moves into a phase characterised by the Roaring 20s.
There had been much speculation whether the world would see a Roaring 20s period following the pandemic, in the same way as occurred after the World War I.
In a webinar, Longview Economics chief executive, Chris Watling, said markets were moving towards a ‘Roaring 20s’ style following the market downturn last year which would indicate a multi-year growth cycle.
“2021 will have strong growth backed up by fiscal stimulus, I expect to see a multi-year economic upswing supported by housing and investment cycle. This will include a mini-cycle of two to three years which already began in mid-2020,” he said.
“Growth stocks are at extremes relative to value, they are looking very expensive compared to value whereas value and cyclical stocks will do well for the next few years as they did in the Roaring 20s. It will be more wow and less worry.”
Characteristics currently which were similar to the Roaring 20s included higher cash balances, high saving ratios, increased net housing wealth and lower household debt relative to gross domestic product.
Moving onto bond yields, these had been rising in the US in the past few weeks which was prompting fears of rising inflation and interest rates.
However, Watling thought they were due a pause. This had already started in Australia and New Zealand and would be likely to happen in the US in the next few weeks. A pause would then last for a “few months” before the rise in bond yields was renewed later in the year.
AUTHOR
Laura Dew
Recommended for you
Retailisation of private markets such as evergreen funds may seem like appealing options for wholesale and retail investors, but providers risk undermining trust if their products are unclear.
Ethical investment manager Australian Ethical has seen its funds under management rise by a third over FY25 to close out the year at $13.9 billion.
BlackRock Australia’s head of intermediary distribution James Waterworth has taken up a new distribution role at an alternative asset manager, while Antipodes has hired a distribution director.
BlackRock’s iShares ETFs have reported a record first half for inflows, gaining US$192 billion in the past six months, to see overall ETF assets under management rise to US$4.7 trillion as it launches its first active ETF in Australia.
