Outlook: Low growth, inflation, and rates are "here to stay"
TORONTO, June 28, 2017 /PRNewswire/ -- Manulife Asset Management today released its latest Global Intelligence report, summarizing the near-term outlook of its investment experts. Entitled "Global Intelligence Summer 2017," the report and an accompanying video are available at www.manulifeam.com (full link below)
Among the economic insights covered in the report:
Megan Greene, Chief Economist, in summary says, "Low growth, low inflation and low rates, are in our view, here to stay." She writes that "The US remains a two percent growth economy, the Eurozone in aggregate roughly 1.5 percent, and Japan around one percent. We will no doubt have quarters of growth that exceed or fall short of these estimates depending on government and central bank policy. But overall we see little reason to believe that much has changed on the potential GDP growth front in any major developed economies."
She adds that:
- Our conviction that we are stuck in an environment of low growth, low inflation and low rates in the developed world has only strengthened.
- Soft data — confidence and survey data — have been buoyant over the past six months but hard economic data doesn't look all that robust.
- An oversupply of debt, macro liquidity, cheap labor and regulation alongside a low labour force participation rate and unfavorable demographics will continue to weigh on growth.
Moreover, she sees little reason to believe productivity growth will accelerate significantly over the next few years.
In the view of Bob Boyda, Head of Capital Markets and Strategy, "Investor optimism has certainly carried us post-election and into the first half of 2017 and it has propelled equity markets across the globe, for very good reasons: it's been backed up by stronger earnings. But too much investor complacency is setting in and we think that could lead to a rougher road in the second half of 2017."
"In many ways, our thesis for equities to return four to five per cent — we call it the 'half-return world' — appears to be true for the majority of equities. However, a few mega-tech stocks have been leading the parade and, given the cap-weighted nature of the major stock indices, may be giving the impression that markets are doing much better than they are. History tells us that's another reason to expect bumps ahead."
Manulife Asset Management portfolio managers, in summary, share several concerns:
- Volatility may be low, but it could create a false sense of calm on the surface.
- Most managers note that current levels of asset valuation — both fixed income and equities — are concerning.
- Most believe that the US economy remains fundamentally sound, with the labour market remaining healthy.
- Most indicated they will be monitoring the speed at which the US administration is able to navigate the legislative structure in Washington and translate its proposals into policies.
Link to full report and video:
About Manulife Asset Management
Manulife Asset Management is the global asset management arm of Manulife, providing comprehensive asset management solutions for investors. This investment expertise extends across a broad range of public and private asset classes, as well as asset allocation solutions. As at March 31, 2017, assets under management for Manulife Asset Management were approximately C$477 billion (US$358 billion, GBP£286 billion, EUR€335 billion).
Manulife Asset Management's public markets units have investment expertise across a broad range of asset classes including public equity and fixed income, and asset allocation strategies. Offices with full investment capabilities are located in the United States, Canada, the United Kingdom, Japan, Hong Kong, Singapore, Taiwan, Indonesia, Thailand, Vietnam, Malaysia, and the Philippines. In addition, Manulife Asset Management has a joint venture asset management business in China, Manulife TEDA. The public markets units of Manulife Asset Management also provide investment management services to affiliates' retail clients through product offerings of Manulife and John Hancock. John Hancock Asset Management is a division of Manulife Asset Management.
Additional information about Manulife Asset Management may be found at ManulifeAM.com.
Manulife Financial Corporation is a leading international financial services group that helps people achieve their dreams and aspirations by putting customers' needs first and providing the right advice and solutions. We operate as John Hancock in the United States and Manulife elsewhere. We provide financial advice, insurance, as well as wealth and asset management solutions for individuals, groups and institutions. At the end of 2016, we had approximately 35,000 employees, 70,000 agents, and thousands of distribution partners, serving more than 22 million customers. As of March 31, 2017, we had $1 trillion (US$754 billion) in assets under management and administration, and in the previous 12 months we made almost $26.3 billion in payments to our customers. Our principal operations are in Asia, Canada and the United States where we have served customers for more than 100 years. With our global headquarters in Toronto, Canada, we trade as 'MFC' on the Toronto, New York, and the Philippine stock exchanges and under '945' in Hong Kong.
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SOURCE Manulife Asset Management