INVESTMENT STRATEGY – PRIVATE BANKING, 2ND QUARTER 2014
- Overall market conditions should remain favorable for developed countries, but further tightening and slower growth lie ahead for emerging economies, still battling credit and currency-led inflation.
- In the US, inflation has troughed but should remain moderate, pushing the first rate hike out to early 2015 – provided the economy does not relapse.
- The Eurozone has turned a corner, particularly in the periphery, but for the recovery to switch into higher gear, investment in the private sector needs to pick-up and the ECB should increase its support.
- In equities, our focus is now shifting from the US to Europe, specifically in terms of earnings prospects and the potential for domestic versus global players.
- While there may be some further room for spread compression, the credit bull market now looks very mature, particularly in the lower graded segment. This warrants increased selectivity.