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Komfie Manalo, Opalesque Asia: The resurgent geopolitics in the Middle East, the U.S. and Europe could potentially jeopardize the economic growth that has shifted to high gear this year, Lyxor Asset Management said. So far in 2017, economic activity has fueled double digit gains on most risk asset classes.
Lionel Melin, senior cross-asset strategist at Lyxor AM said, "First, in the Middle East, the future leader of Saudi Arabia seems to try to consolidate his power. The situation is moving fast with a number or players involved: Qatar, Iran, Turkey, Lebanon, Syria, Iraq and Saudi Arabia of course… without forgetting Isis, Russia and the US. We don't expect an escalation, but we do think the risk premium will keep oil prices high for a while. We have upped our target range for a barrel of Brent to $55-61."
The second geopolitical concern that poses risk is in the US, where both houses of Congress have now released their tax reform proposals and negotiations are ongoing. Melin said Lyxor believes the odds of an accord have increased; all the more so now that Republicans are under pressure to deliver something ahead of mid-term elections next November.
Lyxor is recommending staying invested in US equities, despite the expense. However, the firm will not state any sector preference as it is too early to fully understand how the final version of the fiscal package might look.
Finally, in Europe some old hurdles ha...................... To view our full article Click here
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