UBS Wealth Management’s Chief Investment Office (CIO) forecasts that 2018 will be positive on global equities relative to high-grade and developed world government bonds. Global economic growth should continue at the high 3.8% rate witnessed in 2017.
Nevertheless, investors face changing monetary, political, technological, social, and environmental contexts, with three principal risks to the bull market: a significant rise in interest rates; a US-North Korea conflict; and a China debt crisis.
For emerging markets, the outlook is cautiously optimistic. However, South Africa’s political risk outweighs the nation’s growth perspectives in fast developing sectors such as technology.
Mark Haefele, Global Chief Investment Officer at UBS Wealth Management, says: “Periods of high economic growth often sow the seeds of their demise. But there is little evidence today of an impending recession. Historically, recessions have been caused by one or more of: capacity constraints, oil price shocks, excessively tight monetary policy, contractions in government spending, or financial crises. None look likely to materialize in 2018. In this environment, we remain positive on equities relative to high-grade and government bonds.”
Overall, UBS expects emerging markets to be well prepared to weather gradual monetary tightening globally. In addition, few other regions are better positioned to benefit from growth in …read more