|About This Video
|We speak to Markus Schomer, Managing Director & Chief Economist at PineBridge Investments, for his outlook for 2011.
1) What major trends do you see developing in 2011? What are some of the investment strategies to get ahead of the curve?
- Well see economic growth accelerating in US, providing stimulus for economies around the world and drive financial markets
- In order to get ahead of the curve, one needs to take advantage of the strong fundamentals of the corporate sector
2) What are the big risks that might derail markets in 2011?
- Politics would cause volatility in financial markets: US tax cut, crisis in Ireland, China dealing with capital inflows, commodity prices and raising interest rates, which pose risks if policy makers make wrong decisions
3) Whats your outlook for equities versus fixed income in 2011?
- In 2010, fixed income has been the better investment, especially for Emerging Market bonds and corporate bonds
- Next year the balance will shift towards equities; acceleration in economic growth will bring acceleration in profits, making a better environment for equities
4) Is inflation is a near-term threat and how will this impact the market?
- In US and Europe, well see very low and stable inflation for a number of years, which will not be an issue for investors
- Inflation is a bigger issue for Asia next year, and will cause volatility to the markets
5) Whats your outlook for currency movements in 2011?
- Not much change of trends in 2011: fairly weak US dollar and fairly strong Emerging Market currencies, driven by interest rate differentials
- By the end of 2011, the Fed may raise interest rate for the first time, and the widening interest rate differentials between US dollar and euro/EM currencies will start to generate a stronger US dollar environment - From 2011 to 2013, well see dollar strengthening again and other currencies will be weak
6) Whats your most favoured market/sector? Why?
- Sectors exposed to the recovery in corporate activities: technology, infrastructure, export-related
- Growth in US will be most visible next year; Asia and Latin America will continue their strong growth
7) Which market/sector will you avoid in 2011?
- Housing in US and EU will lag the recovery right now; financials may not do well in the next few years on the back of continuing losses in the housing market and if the Fed raise interest rates, the environment of profit growth for banks around the world will not be good
||25 November 2012
||Ask The Experts: Markus Schomer's Outlook on Global Economy in 2011