May 16, 2013
Emerging markets have become the engines of global growth as their global influence increases, leaving developed markets in their shade, according to HSBC Global Asset Management.
In its latest IQ (Investment Quarterly) global market outlook, HSBC Global Asset Management indicates that post-crisis growth is likely to remain subdued for the next few years as there will be a structural overhang on growth from developed world leverage and population ageing. Compounding the problem, monetary policy has lost much of its power to stimulate in this balance-sheet constrained world and the need for fiscal consolidation will also limit the policy response.
Specific challenges include the on-going euro zone crisis, US fiscal adjustment and risks to
, Global Head of Macro & Investment Strategy at HSBC Global Asset Management, says: "The conclusion that the developed world is most likely locked into low growth for an extended period has far-reaching implications for developed world monetary policy.
For central banks
, targeting lower inflation seems to be out the window, at least for now. The focus is on generating growth and employment.
"Meanwhile, emerging economies are likely to grow more rapidly than the developed world but will also face challenges. Growing pains are likely to include asset price bubbles from excesses that will inevitably get in the way from time to time."
, Regional Head of MENA Wholesale, HSBC Global Asset Management, says: "The oil producing countries in MENA are continuing to benefit from triple digit prices in oil, supporting the economic growth and further investment projects. Phil correctly mentions the concerns of asset price bubbles with emerging markets but the GCC expansion is comparing very well against its peers, given the solvency of the local governments and deflation in asset markets could prove more supportive."
This quarter's Investment Quarterly also examines: