It’s been a turbulent time in the financial market over the past few years, making investment options tricky. But if you were wondering which assets to pop in your stocking towards the festive year end, it looks like developed equities are currently a safe(ish) bet.
That is according to Dean Turner, investment strategist at HSBC Private Bank, who favours US, European and Japanese equities. ‘In our view, recovering economic growth should be supportive for earnings in these regions,’ he said in a press release.
Turner even says that equities are the bank’s preferred asset class, suggesting that the long-favoured bond market has well and truly fallen from grace. Certainly, there has been much angst surrounding bonds due to the US government’s plans to taper its bond-buying programme over the summer, otherwise referred to as quantitative easing.
Despite the fact that the US Federal Reserve has actually held off on the taper, attributed to disappointing employment figures yesterday by The Telegraph, confidence in the global bond trade is at an all time low.
So, as we turn our attentions firmly to the stock market, here is a rundown of the three developed equities recommended by Turner.
North America is home to some of the world’s highest quality companies and strongest brands and leads the way in many including technologies. It also has some of the world’s most effective management teams, giving it the capacity to weather economic cycles.
However, do err on the side of caution as Market Watch & Corporate Actions Specialist Giuseppe Montefinese reported that US equities recently experienced a moderate pull-back from its record high on the S&P, with energy, financials and materials leading declines. This is said to be due to the US Federal Reserve’s hesitation over tapering its bond-buying programme due to concerns over weak jobs data, leading to an uncertain market.
These stocks are looking particularly rosy at the moment. In fact, European equities rose to a five-year high on Tuesday after a weak US jobs report boosted expectations that the Federal Reserve would keep monetary policy ultra-loose for longer, according to Tricia Wright Of Reuters.
Therefore, as the US dips in performance while it decides to taper or not to taper, other global markets are cashing in on an unexpected extension of liquidity across the markets. Harry Morgan, head of private investment UK at Thomas Miller Investment, affirms this positive performance. “I think there’s a real drive to boost the shareholder returns through dividends; our view (on European equities) would be pretty optimistic.’
Japanese equities are currently enjoying profitable times. This week, it emerged that Japan’s Nikkei 225 has edged higher, ahead of the US jobs report. The results of the report will directly affect the US Federal Reserve’s decision over whether or not to start scaling back its quantitative easing programme.
Pictured above: The bright lights of Tokyo
So, while I agree with Turner that European and Japanese equities are faring well, it seems that, at least in the short term, US stocks are not performing quite as well. But as ever, the US market will directly impact other global markets, and so keep stock of the Fed’s tapering programme as once that kicks in, the financial tides could well turn again.