Multi-asset  

The US and Japan were 2013’s winners

This article is part of
Multi-Asset - January 2014

James de Bunsen, fund manager on the multi-asset team at Henderson Global Investors, says: “Whereas other developed equity markets have been driven almost exclusively by share buybacks and multiple expansion, corporate Japan has actually grown profits, consequently valuations in Japan relative to elsewhere still look attractive.”

Mr Chatfeild-Roberts also believes Japanese equities have the potential to deliver decent returns to investors in 2014 highlighting that on the back of the government’s measures, there are now signs that mild inflation is being successfully injected into the veins of their economy.

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He says: “The stockmarket has responded with a renewed sense of optimism and valuations are reasonable relative to other developed markets.”

But while Japanese equities may be vulnerable to a pullback at some stage, Mr de Bunsen is confident that efforts will be redoubled to boost sentiment and markets in any such event.

While the UK continues to mend, it still however has the same issues as the US; chiefly it is being buoyed with significant monetary easing.

But the government’s Help-to-Buy initiative has kickstarted a renaissance in the UK property sector, which in turn is driving other parts of the market and economy. Mr Chatfeild-Roberts says: “Employment levels are improving, the consumer is feeling more confident, and the UK economy is gaining traction. The UK stockmarket is by no means as cheap as it was but I believe there are still opportunities for active fund managers to pursue.”

Philip Scott is a freelance journalist

Developed markets Vs Emerging Markets

Stockmarket

Developed markets : US equities performed extremely well in 2013 with the S&P 500 producing a strong return of 29.1 per cent, while the Topix delivered 24.67 per cent and the FTSE All-Share produced 20.81 per cent.

Emerging markets: The MSCI EM index disappointed in 2013 registering a loss of 4.41 per cent while of the four Bric countries the MSCI Brazil index posted the worst loss of 17.6 per cent.

GDP Growth

Developed Markets: The OECD has estimated real GDP growth in the US will improve markedly in 2014 to 2.9 per cent from 1.7 per cent in 2013, while the euro area will also see improvements to 1 per cent GDP growth

Emerging markets: The outlook is mixed with the OECD noting China will “remain weaker than previously projected in most other major emerging market economies”. But that countries such as Chile, Turkey, Mexico, Korea and Israel “will continue out-pacing growth in other advanced economies”.

Politics

Developed markets: Political pressures in the developed world seem to have eased as austerity starts to work, while in Japan prime minister Abe implements his three arrows of reforms. The next uncertainty will be the UK election in May 2015 and the possibility of a new party in government perhaps altering the UK’s economic plans.