Faced with low cash rates on most bank accounts, some modest signs of inflation, and reasonable economic activity data throughout the world, we believe that equities will continue to fare relatively well next year.
There is little doubt that some segments of the American and European equity market continue to raise some questions over their elevated PE ratios. However, we believe that by focusing on equity sectors, that are witnessing strong underlying growth from their end markets, we should make some headway next year within stock markets.
As an example of sectors that are experiencing positive fundamental shifts in their business, we think that investors should consider casting their gaze towards major mobile payment providers, technology stocks, industrials and the consumer discretionary sector. In the latter case, the emerging middle class in Asia, particularly in China, makes its buying power apparent at many Luxury good outlets.
Elsewhere, some countries within the Emerging Markets field may face a tougher period during 2018, not least due to a rising US rates cycle. The longer-term fundamentals remain in place and they are well known, however, countries with large fiscal or current account deficits, some of which are reliant on external borrowings, in a hard currency such as the USD, may well find life a bit tougher.
Your Wealth at a Glance.