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Bailey McCann, Opalesque New York: New York-based asset manager PineBridge Investments is warning investors to watch out for a bumpy ride as markets adjust to new leadership in the US and abroad in its outlook for 2017.
PineBridge cautions that investors will need to keep an eye on the rise of political risk in the developed world, particularly in the US and Europe, which could depress growth and raise market volatility.
"When the two largest economies – the US and China – pivot from slowing to revving up, take notice. Several other simultaneous regime changes are also likely to be fellow travelers," said Michael J. Kelly, Global Head of Multi-Asset at PineBridge in an interview. "Specifically in the US, I think a lot of people focused on Trump the person during the election, but now we are likely to see a new focus on his policies."
According to Kelly, if the expected tax cuts in the US materialize, after-tax cash flows will now be worth more in US equity markets. US small-cap and value stocks’ economic sensitivity will make them favored, as valuations are now being complemented with improving fundamentals by the second half of 2017, when tax rates should decline.
In emerging markets, PineBridge cites India and Indonesia as pockets of opportunity. Commodity producers are also likely to be big winners with infrastructure programs working their way through the pipeline. The broader slump in emerging markets could also reverse as many of the main factors that le...................... To view our full article Click here
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