A World in Transition
Times of transition create new opportunities for countries that take the long view and companies that are innovative and forward-thinking who are ready to take advantage of shifts created by last year’s displacements. Bottom line: a volatile year where selectivity should be emphasised.
Market displacements were enormous in 2015. The continued deterioration of commodity prices, dramatic change in foreign exchange rates and increased technological disruption perplexed markets.
Only 17 of the 93 primary indices in 2015 managed to post positive returns in U.S. dollar for the year, the lowest level since 2011. The average return in 2015 for these indices was (6.8%). Positive performance was very selective as only a few stocks provided strong returns and maintained momentum through the rippling effect of 2015's displacements.
Our tech focus and European multinational exposure were top contributors to positive performance. Our foresight of the US Dollar breakout in 2013 also continued to benefit our global view.
Credit: The Growth Illusion
Low-interest rates and a tougher global growth environment have fueled record share buybacks, M&A and balance sheet growth. Financial engineering of artificial growth is peaking.
China: Forget the Noise, Look at the Trend
China and Asia-Pacific stand with a variety of advantages - demographics and reforms being primary. Strategically, the region is well positioned to realise on its advantages. Rising valuation is a potential outcome of the region's transition.
Demographics: Maturing Trends
Demographics matter! The demographic dividend - an asset or a liability? The rise of a new middle class will transform consumption trends and alter-trade patterns.
Key Segments for Portfolio Growth
Technological change has been a constant thematic focus for us. We are now in a transitional period where digitisation is creating the haves and the have-mores. Keep up or get left behind.
2016 Investment Strategy
Expect volatility in a muddle through global environment. There will be pockets of growth within our themes. Selectivity is key.