As with every year, market participants release their global predictions for the next year and for Jefferies - the securities and investment banking group - it has revealed it is still bigger on equities than on bonds, commodities and high yield debt.
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Equities will show modest double digit returns but for the best part of the year will be
range bound, in our view.
The implicit faith equity investors have in policy makers will be tested again and may mean
trendless markets until QE is adopted.
The global economy is hitting a growth speed-bump at the same time as it is attempting to
rebalance itself following the 2008 financial crisis.
The developed world is still locked into a series of competitive devaluations as they try
desperately to restore competitiveness to their economies.
Emerging markets have temporarily overheated and may take longer to recuperate.
Unless EU sovereign credit markets are allowed to clear, global equities will experience
painful bouts of volatility.
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Within the note, Jefferies also points out that it (emphasis ours):
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We would expect an M&A boom in 2012 as companies grow market share by acquiring competitors and cutting
costs to maintain ROE.
Ultimately, the major investment theme for 2012 will be the time to buy European equities.
Watch out for a fall in the euro, ECB QE and panic within the EU banking system to go overweight.
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Also they provided a handy hit and miss list per country:
| Global Equity Strategy 2012 |
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| Source: Jefferies |
So far, equities on the first full global trading day in 2012 hasn't fared too badly.
Here's the latest as of 10:00 GMT, courtesy of MarketWatch:
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ASIA
Nikkei 225 8,450 +0.60%
Hang Seng 18,877 +2.40%
Shanghai 2,304 +1.19%
S&P ASX 4,155 +1.08%
Sensex 15,924 +2.62%
GlobalDow 1,824 +0.57%
EUROPE
FTSE 100 5,639 +1.20%
CAC 40 3,211 -0.36%
DAX 6,160 +1.39%
FTSE MIB 15,595 +0.91%
IBEX 35 IDX 8,656 -0.77%
GlobalDow 1,824 +0.57%
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Of course Asia has been helped by the positive set of data released from the region:
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China
- Dec official Services PMI rebounds to 56.0 from 49.7 - CFLP
Singapore
- Q4 GDP shrinks, recession looms
- Q4 GDP falls s/adj, annualised 4.9% vs. Q3 vs. forecast -5.5% q/q
- Q4 GDP +3.6% y/y as expected
- Estimates for Q1, Q2 and Q3 revised downwards
- Singapore economy grew 4.8% y/y in 2011 vs. forecast 5.0% y/y
- Q4 Manufacturing -21.7%
- Increased chances of a technical recession
- Most economists expect cbank to keep policy stance in April
- Singapore Q4 private home prices +0.2 pct vs Q3
Source: Reuters
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2012 has just started and as 2011 demonstrated - analysts forecasts have been predictably cautious as 2012 is bereft with key political elections round the world and the sovereign debt crisis is still rumbling on.
For Euromoney's 2012 global outlook, check out the following articles Euromoney published, in conjunction with Ned Davis Research:
Markets Outlook: Why doomsday prophecies for 2012 are wrong
Analysis by Ned Davis Research suggests that apocalyptic predictions about financial markets in 2012 are unjustified. Eurozone Europe will lag but much of the rest of the world can expect a pick-up
Click here for the full story
Economic outlook: Beware of demographic risks
One of the biggest drivers of global growth is demographics. These should continue to push emerging economies forward over the coming years, while weighing heavily on the public finances of already stressed developed government finances
Click here for the full story
US outlook: The perils of a fiscal mess
The US is part of an elite of highly indebted developed nations. Bond vigilantes have attacked some of the eurozone states but have largely ignored the US. As the eurozone sovereign debt crisis resolves itself, the US fiscal position will attract more scrutiny.
Click here for the full story
- Euromoney Skew Blog
