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7IM predicts US may provide surprise growth kicker

7IM predicts US may provide surprise growth kicker

2016 was one of the most contrary periods since the financial crisis and has completely shifted economic perceptions, according to Seven Investment Management’s Stewart Sanderson.

Mr Sanderson, who heads up the discretionary team at Seven Investment Management, said there was an expectation of economic fragility and political stability at the start of 2016, which switched to “quite the opposite” by the end of the year.

He pointed to the plummeting oil price and Chinese policy “mis-steps” in the first few weeks of the year, as fears of a slowing global growth environment took hold.

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But by the end of March, both markets and confidence had recovered, and Mr Sanderson said: “We were reminded once more that economic momentum is a tough thing to stop once it gets going.”

“In fact, 2016 has shifted economic perceptions so much, that the potential for capital spending to turn positive is now being viewed as a ‘coiled spring’, ready to unleash a further boost to growth when the time is right.”

“From 7IM’s point of view, we never believed that the world was as bad as it was painted in the dark days of February, when we saw a proliferation of financial articles screaming ‘sell everything’.”

Mr Sanderson said he remain “pretty confident” that next year will see global GDP growth continue on a positive trend.

But he added: “Rather than relying on one-off impacts from coiled springs in a single region, we see the upward movement being caused by the accrual of small boosts from across the world.

“The US economy may provide a surprise growth kicker, but the more encouraging signs are being seen elsewhere as Europe, Japan and South-East Asia all keep their economies churning, and the commodity exporting nations return to profitability as prices stabilise.”

He said this year governments are going to be under the most scrutiny ever by their electorate, and that it could well be that those who benefitted most from globalisation in Western nations will see their interests put second.

As a business, however, Mr Sanderson pointed out that 7IM hit the £11bn mark in assets under management last year, and said the firm will be focusing on refining and evolving its proposition going into 2017. 

He said: “We look to manage money to expected returns, so are working hard to improve performance, reduce costs and help planners engage their clients with better reporting and online tools.”

katherine.denham@ft.com