Global equities to see strong growth prospects
Real Asset Management (RAM Group) is expecting stronger growth prospects for global equities than Australian equities due to risks associated with banks earnings growth domestically, it outlines in a 2018 Outlook report.
However, corporate activity, however was forecast to increase both in Australia and globally while the growth outlook for China was expected to remain solid, with the light slowdown to low-mid six per cent growth rate.
“We are cautious on the outlook for fixed rate global sovereign debt, and also domestic fixed rate bonds, we prefer floating rate domestic corporate credit and US credit compared to European,” the firm said.
“Overall, we are positive on the outlook for global risk assets including equities and direct property assets.
“We are overweight alternative assets for diversification and yield.”
According to RAM Group, the key risks in 2018 would be linked to a rising global inflation and interest rates as central banks would begin to unwind Quantitative Easing (QE) which might result in “unintended consequences”.
Volatility would be expected to increase as QExit and Fed rate rises would occur.
Also, risk from negative yields abating in Europe and ability for corporates to issue debt at very favourable terms would reduce, and some deals had already failed to launch, the firm said.
As far as Australian housing was concerned, 2017 saw credit rating agencies raising the level of financial risk assigned to Australia due to high leverage and high residential property prices while residential market in Sydney would be expected to slow down.
“The RBA is clearly laying the foundation for some sort of policy normalisation over coming years as employment is approaching full employment and domestic economic growth is expected to improve, as in the world growth rates where it is the first period of developed market synchronised growth in some time,” the company said.
AUTHOR
Oksana Patron
Recommended for you
Some 42 per cent of CEOs say they are actively reinventing their business to stay relevant in the next decade, with consumer services the most common choice for asset and wealth managers.
Former Ophir Asset Management chief executive, George Chirakis, has joined private equity manager Scarcity Partners, while the asset manager has appointed a replacement from Macquarie.
Australian Unity has appointed a fund manager for its Healthcare Property Trust, joining from Centuria Healthcare, as it restructures the product with a series of senior appointments.
Financial advisers nervous about the liquidity of private markets funds for their retail clients are the target of fund managers launching semi-liquid products which offer greater flexibility and redemptions.
