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Prudential Experts: Outlook Brightens For Equity Markets In 2013, Investors Continue Search For Yield In Debt Markets

Stocks in this article: PRU

Prudential market experts are optimistic about the prospects for the financial markets in the coming year as growth continues in the U.S. and global markets stabilize. They outlined their views at Prudential Financial, Inc.’s (NYSE:PRU) 2013 Global Economic and Retirement Outlook briefing in New York today.

A replay of the outlook briefing is available on Prudential’s newsroom.

Ed Keon, managing director of Quantitative Management Associates, said that distance from the recent financial meltdown has given markets and the economy time to heal, leading to slow, but steady growth in 2012. He expects the pace of growth to pick up in the U.S. and globally in 2013, citing a healing labor market and more vibrant life in home prices, auto sales and other economic measures.

“The title of an old Rolling Stones song, ‘ Time is on My Side,’ might help describe the global economy and equity markets in the last few and perhaps the next few years. As more time passes since the financial meltdown without another acute crisis, the healing of personal, financial and corporate balance sheets, incomes and psyche has proceeded,” Keon said. “Growth has been slow, but steady, and we think it will pick up in the U.S. and globally in 2013. Perhaps in 2013 Washington DC will be more like professional sports officials, guiding and managing the action of the economy rather than dominating the economy. Most folks find this hard to believe, but the U.S. equity market has delivered 15 percent returns in 2012, and has averaged 10 percent returns over the past few years despite some ups and downs. That looks like a bull market to us, and we think it will continue in 2013.”

Quincy Krosby, a Prudential market strategist, noted that the search for yield will remain global with investors seeking opportunity in emerging market bonds, global high yield and Eurozone debt. She sees positive trends in Asia such as economic stabilization in China that is expected to increase demand for commodities, benefitting U.S. and European-based global industrial companies. She also believes continued quantitative easing in Japan will keep the yen weak relative to other currencies, which should benefit Japanese exporters. Still, she says inflation remains a concern.

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