With current U.S. economic policy uncertainty and equity volatility, know where to find investment growth overseas.
Uncertainty in U.S. equity markets is likely to continue through the rest of 2017 as investors react to ongoing policy changes in the U.S. In this video, Melda Mergen looks at alternatives to fully valued U.S. stocks. She identifies attractive valuations and growth prospects in Europe and emerging markets.
We believe equity markets the rest of 2017 will still have a lot of volatility.
There are still a lot of uncertainties namely around the fact that we had the U.S. election and all the investors are expecting change in policy, and that is still on the agenda for the new administration. We haven’t seen a lot of results yet, or decisions yet, so those are going to be definitely on our minds going through 2017.
In global markets, U.S. economy is still on a very strong, you know, footing, so we definitely like U.S. economy. That being said, there are some areas where we think valuations are stretched. On the global side, I would say Europe is showing good momentum in terms of earnings, so that’s definitely an area that we are paying attention, especially given that ECB continues with their monetary policy and accommodation through their QE. We see the opportunities at the stock level when it comes to emerging markets. We believe that in the emerging market, consumer-driven sectors are going to lead the returns and there are a lot of good stories when you look at individual companies.
I would say the key themes in the equity markets really revolve around innovation and secular growth. We still believe that there are a lot of opportunities, namely in healthcare and information technology where the companies are going to be the leaders in their industries. We think that there are opportunities in the marketplace at the stock level. We see a lot of strong fundamentals. The other theme that, of course, we all focus on is the possible policy changes, especially in the U.S. So we will be definitely watching very closely what those changes will be.
Article by Melda Mergen, Columbia Threadneedle Investments