What can be expected from Investment Markets in 2017?

What can be expected from Investment Markets in 2017?

Investment Review – What lies ahead in 2017? The thoughts of Gilt Edge.

January 2016 saw investors pricing in the first rate rise in the US for years and a consolidation of the oil price following the falls in 2015. Bond and equity markets had stabilised after the continued political angst of Greece and the Chinese devaluation of the Yuan in September 2015.

Substitute the Greek crisis for the political events this year and you have a similar situation. This backdrop of economic and political uncertainty had a major impact on all asset classes for the first seven weeks of last year. Significant losses were made across most markets as investors flocked to ‘safe haven’ assets. Many were troubled with the currency situation, the rate rise path in the US, low growth political events and rising inflation. Not much has changed in twelve months as the same market situation is present now. This to us highlights one question……..will the markets react similarly to 2016?

In terms of risks and opportunities, we expect 2017 to be very similar to 2016. There will be much volatility; however, risk will reward investors with longer term investment time horizons. The difference will be in how those returns are generated. This year will see a more ‘risk on’ opportunity than 2016 with equities providing the bulk of returns. This is a significant difference to 2016 which saw Gilts and Bonds providing investors with equity type returns for most of the year.

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