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BlackRock backs equities in bullish 2017 outlook

The world is but ‘mid-way’ through the current economic cycle with plenty of puff left in the global economy pronounced asset manager BlackRock, writes Alec Marsh

BlackRock, the world’s biggest investment manager with more than $5 trillion in assets under management, gave a bullish backing to global equities today pointing to ‘sustained economic expansion’ in the world economy at its Global Investment Outlook Mid-Year 2017 briefing in London.

Moreover the New York-based manager said that market anxiety, partly hanging over from the financial crisis but also prompted by the duration of the current period of economic growth, meant that some investors were missing out by an excess of caution. The comments come amid continued speculation over the high valuation of stocks particularly in the US and also UK and ought to offer some consolation to weary investors.

Richard Turnill, BlackRock’s global chief investment strategist, insisted that the eight-year long worldwide recovery since the great recession was but ‘mid way’ through its cycle – and therefore not as some analysts fear approaching its end.

‘The length of the cycle from here is likely to be measured in years not quarters,’ Turnill told reporters, indicating that any future recession was years away. ‘This has been a very unusual financial cycle,’ he noted. ‘But I see little evidence of euphoria or financial excess in the system today which gives me confidence that the expansion can been sustained.’

However, partly as a result, Turnill, a former Bank of England hand, cautioned that the relatively limited volatility currently seen in the markets should not be cause for concern for investors. ‘Many investors are nervous because volatility is very low,’ he noted, adding his view that, ‘high volatility is often a buy sign but low volatility is not a sell sign.’

Pointing to sustained economic growth in ‘all three major geographic regions’, the US, Europe and Asia, Turnill added: ‘We [foresee] being in low volatility regime for a long time and the real challenge is most investors aren’t taking on enough risk. The global economy is firing on all cylinders right now.’

For the next quarter the asset manager backed equities in emerging markets, Europe and Japan, on the back of global economic growth, and remained ‘neutral’ on US equities. Overall it was ‘positive on momentum and value in stocks in a sustained expansion’. On bonds, it was positive on US investment grade credit, but did not recommend US government bonds. It believes that the US dollar will strengthen moderately in the medium term, and remains ‘favourable’ to sterling based on solid economic fundamentals.

Alec Marsh is editor of Spear’s

 

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