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Opportunities emerge from increasing volatility, says ING IM
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| Eric Siegloff
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ING Investment Management’s (ING IM's) global economic growth outlook for 2011 has been dampened, although opportunities remain in global and Australian equities, it stated.
ING IM expected real global gross domestic product (GDP) to be around 3.8 per cent compared to 4.8 per cent in 2010, with expectations further dampened in light of what it saw as “untested policy prescriptions from governments and central banks”.
ING IM also stated that the gap between the economic performance of developed and emerging markets would widen, with GDP growth of emerging markets projected at 6.5 per cent compared to 8.1 per cent in 2010, and developed world GDP at 1.6 per cent compared to 2.2 per cent in 2010. It stated that projections could worsen in light of the added concern of a 25 per cent possibility of another serious downturn.
ING IM global head of strategy and tactical asset allocation, Eric Siegloff, said investors would have to take a dynamic approach to their investment strategies, with a greater focus on growth, dividends, income and yield.
ING IM, however, saw good opportunities in global and Australian equities. It stated that the key drivers for global equity markets in 2011 would be positive earnings growth, attractive valuations, abundant liquidity and strong corporate wealth, all underpinning sustainable income and growth, increased corporate spending and emerging markets.
“The 2011 outlook for global equities is good and we expect returns to be in line with earnings growth. However, investors will need to focus on yield and also on growth markets," said ING IM's chief investment officer and head of Australian equities, James Wright.
The positives for Australian equities lay in solid population growth and the demand for raw materials.
“Strong business investment, rising commodity exports and robust income growth supporting household consumption will continue into 2011, which will support the local markets,” Wright said. “However, we do expect continuing volatility, which will create value-capture opportunities for active managers."
AUTHOR
Mike Taylor
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