Staff
Markets likely won’t have as strong a run as they did last year, but expect the upward trend to continue, say a group of analysts at Richardson GMP.
Highlights from the firm’s quarterly outlook include:
- Are fundamentals still constructive? Accommodative monetary policy, benign inflationary pressures and strong corporate profitability lifted markets in 2013, and all these factors remain present as we head into 2014. The only difference is some markets, namely the U.S., are no longer on the cheap side of historical valuations. Not expensive, but not as cheap as a year ago.
- The economic recovery is broadening across major developed markets including the U.S., Europe and Japan.
- Consumer confidence is rising, creating a sounder, safer and more resilient environment. This will translate into improving corporate confidence, encouraging corporate spending and mergers and acquisition activity in 2014.
Read: What will 2014 bring?
- Limit interest rate-sensitive investments. The direction of monetary policy is beginning to change in the U.S., thanks to an improved economic foundation. Yields will continue to edge higher to more fundamentally justifiable levels. North American overnight central bank rate policies are unlikely to change in 2014; however, limiting interest rate-sensitive investments may be prudent during this period of adjustment.
- Favour equities over bonds, from a portfolio perspective. The U.S. market, while a bit more expensive, remains well positioned to outperform Canadian equities for a fourth year and we remain comfortable with U.S. dollar exposure from a currency perspective. Within the Canadian markets we would focus more on companies levered to the North American economy.
- 2014 returns should be positive. Broadening economic growth, reasonable valuations and healthy earnings growth bode well for positive returns.
Read the full report here.
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What do top economists see for 2014?