“Greece aside, the majority of Europe is recovering and has been the beneficiary of capital inflows,” they said.
“After a brief hiatus earlier this year, US corporate earnings revisions are beginning to recover, Japanese companies are growing strongly following widespread stimulus and the UK economy appears to have received a boost post the General Election.”
The art of equity
While the equities outlook appears relatively optimistic, there is always the China complication to contend with, where the Shanghai Composite Index has fallen 35% since June.
But RLAM is unruffled, and believe that far from posing a problem, China’s domestic market slide could actually turn out to be positive for the wider equities space.
“Animal spirits have turned but the Chinese authorities are already stepping in to limit the negative impact of stock price falls on the economy,” they said. “From a global point of view, Chinese weakness isn’t all bad as it means lower commodity prices and looser monetary policy.
“Until the recent abrupt pull back in Chinese stock prices it felt like a stronger recovery might have been on the cards. Ironically, a strong upturn in China could cause problems for the world equity and bond markets if it meant a sharp rise in commodity prices, so in this sense Chinese stock price weakness is not bad news for the rest of us.”
