At a joint luncheon meeting of AmCham Taipei’s Asset Management, Banking, and Capital Markets Committees on Oct. 20 at the Grand Hyatt Taipei, Belinda Boa, the Hong Kong-based Managing Director of BlackRock Asset Management North Asia, gave a presentation on “Global Economic Outlook,” providing a briefing on the global BlackRock investment team’s assessment of the prospects for the world economy in the year ahead. Among her key points:
- A gradual rise in interest rates can be expected in the U.S., probably regardless of who is named as the next Federal Reserve chairman. After having forecast rate hikes many times that did not occur, most other analysts are no longer making that prediction. But BlackRock expects rates to increase, though not to the same level as before the global financial crisis.
- Investors should not necessarily be put off by the currently high equity valuations in the U.S., as the price has been justified by earnings. But preference should be given to other markets. The environment seems especially favorable for emerging markets.
- Geopolitical factors are injecting more unpredictability than usual into the market. Some major examples are the North Korean nuclear threat, renegotiation of the North American Free Trade Agreement (NAFTA), and growing tensions between the United States and China. There is concern over the possibility of a geopolitical surprise.
- BlackRock expects sustained economic expansion and is positive on “momentum” and “value” stocks, especially in emerging markets, Japan, and Europe (it is neutral on U.S. stocks). On the fixed-income side, it likes U.S. investment-grade credits.
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