The US has continued to show growth, but may well be challenged as employment rates have reached all-time highs and little policy progress is being made between Trump and Congress. Europe has been a strong growth area following significant earnings growth, abating fears about the failure of Italian banks and the momentum of populist agendas being largely subdued. The Japanese economy has also surprised on the up in 2017 thanks in part to a weaker but stable currency and an increased focus on shareholder returns and better corporate governance. However, fears surrounding North Korea have started to creep in to the markets. The stability of the UK post Brexit vote is beginning to falter with data showing a slowing rate of GDP growth, UK savings rates at their lowest level in 50 years and also price rises far exceeding that of wage growth. Concerns of protectionist policies being imposed by Trump have eased slightly since the start of 2017 which has given economies within the Asia Pacific region some breathing space. This has helped the excellent long-term potential in these economies get back on track. Lastly, Emerging Market opportunities are becoming increasingly theme, country or stock specific with wide dispersions on investment returns. They have been heavily influenced in recent times by commodity prices.
Overall, the global economic position looks relatively stable but it must be noted that we are roughly 8 years in to a positive market cycle which has been heavily supported by accommodative monetary policy. This has left many investors questioning how long this positivity and stability can be maintained if such policies begin to be unwound. It is therefore important to maintain a diverse portfolio of investments, split across many different regions and investment sectors.
Written by Ian Maitland & Jack White.
This article is for information only and should not be treated as advice. No action should be taken in respect of this article without independent financial advice. This information represents the opinion of Greenfields Financial Management only.