State Street Global Advisors: A Divergent World Creates Opportunities in 2015
December 08 2014 - 7:00AM
Business Wire
Annual Global Market Outlook Identifies Key Areas for Meaningful
Growth in the New Year
State Street Global Advisors (SSGA), the asset management arm of
State Street Corporation (NYSE: STT), today announced that its
global market outlook for 2015 anticipates that diverging global
monetary policy will have an impact on every asset class, but poses
interesting and diverse opportunities for proactive investors.
“Looking specifically at growth, we expect the US economy will
likely accelerate to three percent,” said Rick Lacaille, global
chief investment officer at SSGA. “The eurozone should also grow,
although only slightly faster than in 2014. In emerging markets the
biggest influence, China, should grow by about seven percent, while
those countries that pursue reform agendas offer the best
potential.”
Fortune Favours Riskier Assets
- Improving economic and earnings
environments bring opportunities, even in expensive markets. While
the US appears fully valued, short-term momentum continues to
favour dollar assets and even modest earnings increases will be
supportive to US equity prices. At current valuations European and
Asian markets offer an attractive entry point for long-term
investors looking for greater upside potential.
- Divergent economic and monetary policy
outlooks favour investors that adopt active strategies to harvest
the most compelling opportunities.
- ETFs warrant consideration for
efficient exposure to different market segments.
We (Still) Live in a Volatile World
- Despite the opportunities that still
exist, investing in equities could be risky in 2015, due to the
potential for increased volatility.
- As advanced economies follow
increasingly divergent paths with their monetary policy and
volatility rises, investors must ensure they appropriately protect
their portfolios.
Reform Takes Center Stage in Emerging Markets
- A hot topic for the emerging market
economies in 2015 is reform. Emerging markets rallied in part on
the possibility of reform during elections across India, Indonesia
and Brazil in 2014 and further support for reformers is expected
going forward.
- Investors may want to consider taking
an active investment approach, tilt allocations toward reformers
and consider emerging market small caps for their domestic focus
and dynamic growth potential.
Fixed Income and Currency – A Tight Squeeze in the Developed
World
- We expect the US and the UK to begin
tightening fiscal policy next year while the European Central Bank,
China and Japan continue to stimulate growth.
- Investors can expect the US yield curve
to flatten further as a rise in short-term rates is offset by
overseas demand for longer-dated Treasuries.
Cautiously Optimistic on EMEA
- The International Monetary Fund
downgraded the prospects for Germany, France and Italy in 2015 and
doubled the probability to 38 percent that the eurozone will
re-enter a recession within the next six months.
- European countries that have reformed
in recent years can be an opportunity for investors looking for
dividend yield and to profit from currency movements.
“Despite 2014 being marked as the year of recovery, very few
countries witnessed this, with the exception of the US, which
demonstrated a real resilience to market conditions and rising
geopolitical tension,” continued Lacaille.
“Nonetheless, investors must be mindful of increased volatility
in equity markets as a result of divergent global monetary
policies. An intelligent assessment of the divergent environment
and its risks and opportunities will reward the astute investor in
2015.”
To download SSGA’s Global Market Outlook, please click here.
About State Street Global Advisors
State Street Global Advisors (SSGA) is a global leader in asset
management. The firm is relied on by sophisticated investors
worldwide for its disciplined investment process, powerful global
investment platform and access to every major asset class,
capitalization range and style. SSGA is the asset management
business of State Street Corporation, one of the world’s leading
providers of financial services to institutional investors.
The views expressed in this material are the views of State
Street Global Advisors through the period ended December 8, 2014
and are subject to change based on market and other conditions.
This document contains certain statements that may be deemed
forward-looking statements. Please note that any such statements
are not guarantees of any future performance and actual results or
developments may differ materially from those projected.
Investing involves risk including the risk of loss of
principal.
CORP-1213
State Street CorporationAlicia Curran Sweeney, +1
617-664-3001aacurran@statestreet.com@StateStreet
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