Despite Global Uncertainties, ING Investment Management U.S. Forecasts Positive Year for U.S., Emerging Market Equities; High-Yield, Emerging Markets Bonds Are Favored in Fixed Income

NEW YORK, Nov. 16, 2011 /PRNewswire/ -- Investors will likely continue to face volatile markets in the first half of 2012 as Europe continues to sort through its fiscal challenges, but steady economic growth in the U.S. could spark an 8 percent-9 percent rally in domestic equities, according to ING Investment Management U.S. (ING IM).  ING IM is forecasting improved GDP next year of 2.5 percent with modest inflation, providing a backdrop for U.S. equities to rise, with a target for the S&P of 1,450-1,475 at year-end.

"By no means are risks totally out of the market," said Paul Zemsky, chief investment officer of Multi Asset Strategies for ING IM.  "There will be hiccups felt here as European policymakers sort through the issues. Nonetheless, over the year, we believe the U.S. economy will show positive growth, and domestic corporations are positioned well and will demonstrate strong earnings and dividend growth. Against this backdrop, the U.S. may be one of the best-performing developed markets in 2012."

Douglas Cote, chief investment strategist for ING IM, foresees U.S. corporate earnings reaching an all-time high next year, surpassing the records set in 2011.  "We expect that fundamentals will ultimately power U.S. equities higher," he said. "U.S. corporations have shown their resilience even as Europe deals with its debt crises and even with historically high U.S. unemployment."

Cote believes investors must stay focused on fundamentals next year, and he foresees large caps doing well and the outperformance of small- and mid-capitalization stocks owing to favorable earnings.  He maintains that the consumer discretionary sector, a solid performer over the last two years, will once again be strong in 2012. Additionally, he believes the technology sector will benefit from the transformation under way from computers to hand-held devices, and global REITs continuing to be a top performer as the sector experiences strong cash flows from the firming commercial property sector.

Europe, with its forecast of very slow growth, may see its equity markets rise modestly in 2012, Zemsky said. Meanwhile, he believes emerging markets will continue to outperform the developed world as their levels of inflation decline in the first half of the year. The resulting monetary policy easing could very likely lead to double-digit returns for emerging markets in 2012.

ING IM maintains a positive outlook for most fixed-income risk sectors, with high-yield and emerging-market debt two of the most favored areas for 2012.  Christine Hurtsellers, chief investment officer for fixed income at ING IM, pointed to fairly strong credit fundamentals, which, while potentially subject to negative headline risks from Europe, should stand up well next year.

The fundamentals of high-yield corporates look appealing, Hurtsellers notes, with low default rates expected to persist.  Furthermore, companies in the higher-quality end of the high-yield spectrum appear to be well-positioned for the somewhat uncertain growth outlook. In addition, she said emerging-market sovereign issues are poised to do well, especially in Latin America given the demand for commodities, and selected emerging-market corporates also present good values and opportunity.  Structured fixed-income markets, such as mortgage-backed and commercial mortgage-backed securities, may also provide avenues for investors to earn more attractive yields than those of U.S. Treasuries, particularly since interest rates are expected to stay range-bound.

"While U.S. economic growth is expected to be slow in the year to come, we believe it will be positive," Hurtsellers noted, adding that "China and other emerging markets appear positioned to bolster global growth. This scenario provides a backdrop for fixed-income investors to seek out myriad opportunities in risk sectors.  With coupons at or near 8 percent and the possibility of capital appreciation, high yield appears to be a particularly good opportunity while many emerging markets investments may be attractive as these countries benefit from attractive currency markets and valuations."

About ING Investment Management U.S.

ING Investment Management U.S. (ING IM) is a leading active asset management firm. As of September 30, 2011, ING IM manages approximately $163 billion for both affiliated and external institutions as well as individual investors. ING IM has the experience and resources to invest responsibly across asset classes, geographies and investment styles. Through our global asset management network, we provide clients with access to domestic, regional and global investment solutions.

With an emphasis on active management, our investment mission is to find unrecognized value ahead of consensus. To this end, our portfolio management teams seek original insights on markets and securities and a vision of investment potential that differs from the consensus view. We apply our proprietary research and analytics, portfolio diagnostics and risk management to the development of investment solutions in pursuit of our clients' objectives. We believe this is best achieved by structuring our investment platforms as entrepreneurial, skills-based strategy teams united by shared resources.

ING Investment Management U.S. is committed to investing responsibly and delivering client-oriented investment solutions and advisory services across asset classes, geographies and styles. We serve a variety of institutional clients, including public, corporate and union retirement plans, endowments and foundations, and insurance companies, as well as individual investors via intermediary distribution partners such as banks, broker-dealers and independent financial advisers.

Nothing contained herein should be construed as (i) an offer to buy any security or (ii) a recommendation as to the advisability of investing in, purchasing or selling any security. Certain of the statements contained herein are statements of future expectations and other forward-looking statements. These expectations are based on management's current views and assumptions and involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those in such statements due to, among other things, (i) general economic conditions, in particular economic conditions in ING IM's core markets, (ii) performance of financial markets, including emerging markets, (iii) the frequency and severity of insured loss events, (iv) mortality and morbidity levels and trends, (v) persistency levels, (vi) interest rate levels, (vii) currency exchange rates (viii) general competitive factors, (ix) changes in laws and regulations, (x) changes in the policies of governments and/or regulatory authorities, (xi) ING IM's ability to achieve projected operational synergies. ING IM assumes no obligation to update any forward-looking information contained in this document.

SOURCE ING