Midyear investment outlook generally positive

[rooster59]

Midyear investment outlook generally positive

By SPECIAL TO THE NATION

 

THE FIRST half of 2017 is ending and investors are urged to ask: “What are the issues to be followed up and what assets in what markets are considered good investment opportunities in the second half of the year?”

 

To begin with, the world’s economic outlook, still led by the US economy, is generally positive. The figures announced so far are in healthy zones. US President Donald Trump’s plans to cut taxes and invest in infrastructure also nourish the hope that US economic growth will accelerate once those plans are executed. 

 

In terms of interest rates, it is expected that the US Federal Reserve will slow down its attempt to raise interest rates after a series of increases since the end of 2016.

 

The US stock-market outlook is moderately positive. Since the beginning of 2017, the S&P 500 has gone up 8.91 per cent and its P/E (price-to-earnings) ratio was 21.64, Bloomberg reported on Monday. Though the prospect for further growth is there, the figures are not going to be as exciting as they were last year. The currently high market prices also mean it may not be the best time to buy stocks. Investors will have to observe the market closely so that they can make a move at the right moment. However, stock selection will be a recommended strategy.

 

As for Europe, the most attractive region at the moment, political risks have subsided since the end of the French election. Large economies such as Germany and France remain robust with high stability. 

 

Additionally, the European economy will benefit from the weakened euro and the European Central Bank’s continuous quantitative-easing measures, guaranteeing that 60 billion euros will be injected into its financial markets monthly, pushing the inflation rate to its 2-per-cent target.

 

The opportunity presented by European stocks is high. Asset Plus Fund Management estimates the earnings-per-share growth of listed companies in Europe this year at approximately 15 per cent. Moreover, their current market prices are still acceptable, taken into account the forward P/E ratio estimated to be 15.

 

The prices of European stocks are also lower than those in other developed markets, especially the US.

 

As for Asian markets, Chinese equity remains attractive, as the Chinese economy has passed its lowest point and its government is earnestly undertaking economic reforms. Another good sign is that Chinese stocks have just been incorporated into the MSCI Emerging Market Index.

Financial liberalisation through Shanghai-Hong Kong Stock Connect is another positive sign for the flow of investment money into the Chinese economy. 

 

Beyond China, Indian stocks are not to be overlooked. There is a high prospect for Indian economic growth fuelled by the government’s success in economic reforms. 

 

Investors should also seek opportunities in the South Korean and Taiwanese stock markets, as they will benefit from the fact that new tech products are mostly launched in the second half of any year.

 

In conclusion, global equity markets are considered good opportunities for investors with high risk appetite. In any case, investors are recommended to pay attention to timing and selecting the right regional markets. 

 

For investors with low risk appetite, foreign stocks may not be the best option. However, because domestic interest rates especially on savings are expected to remain low for a while longer, risk-averse investors should consider domestic short-term fixed-income funds because of better yields and appropriate duration of investment. 

 

For a prospect of better yields, they may also consider short-term fixed-income funds that invest in foreign markets, but should go for the ones with fully hedged policies to avoid exchange-rate risk. 

 

For investors with moderate risk appetite but who may not be familiar with market timing strategies, professionally managed global multi-asset funds can be another good option, as they enhance the prospect of yields by diversifying asset types across the world. 

 

Any investment entails risk. Investors should thoroughly study prospectuses, fund features, return conditions and risk before investing. 

Contributed by Asset Plus Fund Management. 

 

Source: http://www.nationmultimedia.com/news/business/EconomyAndTourism/30319610

 

 

-- © Copyright The Nation 2017-07-01

[whatawonderfulday]

This is absolutely wonderful news if it is also true for Thailand.  I fully expect therefore that the 18 million Thais who are currently living in the poverty trap will be absolutely astounded and energised by this piece of news. They will now be so motivated I anticipate that they are falling over themselves to work for some Thai Elite or military owned company for 50% of the legal minimum in order for them in their own way contribute to this opportunity to support the wealthy to become richer by increasing stock values.. 

 

Folks get off the roads now the rush to the Junta/Elite controlled and/or influenced enterprises will start sometime soon.

[Retiredandhappyhere]

I had not realised until now that the French economy could be described as "robust".