- Quantitative Easing — navigating the uncharted territory of the taper: Manulife Asset Management economists think a stronger job market could prompt the Fed to start tapering its bond buying program between December and March, with March being their best guess. But if sufficient progress isn't made, the Fed may not move at all. Our US equity expert explains why he believes that if the Fed tapers without causing a dramatic increase in short-term interest rates, it may signal a good environment for US equities. Meanwhile, our Asia fixed income manager believes that the impact of an eventual taper on Asia's fixed income markets will be much more muted than earlier in 2013.
- The macro-economic environment will be additionally important in the year ahead as brightening global growth prospects would impact positively on the world's major trading nations and commodity-producing countries. Manulife Asset Management economists outline their fairly positive outlook for 2014 — thanks to slightly better news coming out of developed markets including Japan — all continuing to hinge on a still-uncertain US recovery.
- Corporate earnings will need to be the story of international equity markets in 2014 to keep the equities rally going. Equity market returns in 2013 have been robust but driven by more than the underlying fundamentals of individual companies. Our global equities expert discusses double-digit earnings growth year-over-year as a necessary driver of potentially low double-digit return for equities in 2014.
- Asia still offers significant opportunities for investors who do their research. Our local investment experts see particular opportunities in the export-oriented North Asian equity markets and within fixed income, in low investment grade and strong non-investment grade credits.
- China will be a key story in 2014 with investors watching to see if it can maintain its GDP growth rates and continue with its reform agenda. Our local currency experts believe that the Chinese currency's low sensitivity to US market moves will continue to keep it in good stead next year, compared to other Asian currencies.
- Hot on the heels of a rate cut by the European Central Bank in November 2013 is talk of the need for negative real rates in the Eurozone in 2014. Our investment team in London believes this will be needed to stimulate the fragile economic recovery. The European banking sector could be key to unlocking investor interest in European equities again as the team believes that positive news from the European Banking Authority's asset quality review could be seen by global investors as a genuine catalyst to re-enter European equity markets.
- Finally, our asset allocation experts take a longer-term look past 2014, sharing their outlook for equity and bond markets around the globe over the next five years. They anticipate returns for equities and non-investment grade bonds, including high yield and floating rate loans, will outpace traditional bonds in the next five years.
Manulife Asset Management Shares Highlights And Insights In "Global Intelligence: The Outlook For 2014"
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