Markets outlook

HSBC Global Asset Management is constructive on the markets for 2017, despite clear risks, uncertainties and episodic volatility continuing to be a feature. That’s the view of Bill Maldonado, chief investment officer, Asia Pacific at HSBC GAM.

From an asset allocation perspective, Maldonado said HSBC continues to prefer global equities and select emerging market equities and debts, while maintaining a structural underweight in global government bonds.

In this gallery, Maldonado highlights four key macro trends in the markets for the New Year.

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Trumponomics

Market perceptions of risk have shifted towards the scenario of a “strong demand recovery”, driven by expectations that Trump will try and implement more growth friendly policies, according to Maldonado.

‘The era of “deflation dominance” is likely over,’ he said.

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Cooperation of fiscal and monetary policy

Maldonado said the second macro theme is related to the cooperation between fiscal and monetary policy.

‘The world is moving toward an “end of austerity” with fiscal authorities shifting to greater coordination with central bankers.

‘Yet various monetary measures including negative rates and QE programmes still mean that global liquidity conditions will remain highly supportive for growth.’

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Improving global activity

‘While Asia remains a dynamic region in the world and continues to be a key driver for global growth, there are also clear signals that growth momentum is picking up across major economies including the US, the UK, Japan and the Eurozone area,’ Maldonado noted as the third macro theme.

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Continuing low interest rates

Last but not the least, Maldonado said despite the Fed’s signal of a rate hike cycle in 2017, investors are likely to continue to face a low interest rate environment with any increases being uber-gradual.

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