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2017 – a list of lists regarding the macro investment outlook

Despite a terrible start to the year and a few political surprises along the way, 2016 saw good returns for diversified investors who held their nerve.

Introduction

Despite a terrible start to the year and a few political surprises along the way, 2016 saw good returns for diversified investors who held their nerve. Balanced super funds had returns around 7.5%, which is pretty good given inflation was just 1.5%. 2017 is commencing with less fear than seen a year ago but there is consternation regarding Donald Trump’s policies, political developments in Europe and the growth outlook. This note provides a summary of key insights on the global investment outlook and key issues around it in simple dot point form.

Seven lessons from 2016

Global growth may be constrained – but it’s far stronger and more resilient than was feared at the start of 2016.

  • The US Federal Reserve is not stupid – it is not on “rate hike autopilot” and takes account of global conditions and the $US and the impact of both on the US.
  • China won’t tolerate a rapid slowing in economic growth – yes it wants to reform the supply side of its economy and slow down the growth of debt but it will not do so blindly.
  • Geopolitics is having a rising impact on investment markets – in part a populist backlash against establishment politics with implications for economic policy, eg, globalisation.
  • But, turn down the noise – fears that Brexit, Australia’s messy election, a Trump victory and an Italian “No” vote would lead to financial catastrophe proved ill-founded. Retreating to cash after these would have been costly.
  • The terror threat is alive and well but the impact on investment markets is limited.
  • Stick to an investment strategy – 2016 proved distracting for investors but they would have done okay provided they stuck to an investment strategy that prevented them from getting blown around by swings in market sentiment.

For more information including:

  • Key themes for 2017
  • Key risks for 2017
  • Five things to watch
  • Three reasons why global growth is likely to continue
  • Three reasons to expect Trump the pragmatist to ultimately take precedence
  • Nine things investors should remember
  • and more….
Download the full report

Source: Dr Shane Oliver Head of Investment Strategy and Chief Economist AMP Capital 

Important note: While every care has been taken in the preparation of this document, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455) make no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This document has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This document is solely for the use of the party to whom it is provided.