Expert predictions for world markets in 2011

The US Simon Laing, manager of the Newton American Fund:

"The latest Quantitative Easing barrage does little to hide the dire economic issues still facing the US, the housing market remains in the doldrums, while the unemployment rate is still uncomfortably high.

"Private investment and hiring growth looks set to be the focus of the US economic recovery, as well as austerity measures. Government-backed sectors, such as defence, look set to suffer as a result of a slowdown in government spending. However, US based companies that do business with countries in the developing world will continue to hold attractive investment opportunities."


Anthony Bolton, manager of Fidelity's China Special Situations:

"During the last few weeks the global bull market appears to have resumed. Emerging markets like China have benefited from the liquidity being created in the developed world. The Chinese economy has not been slowing down as fast as earlier expected and this will probably now happen in 2011.

"However, I continue to believe that the growth rate in China will still be very attractive relative to the growth rates being seen in the developed world."

Douglas Turnbull, Manager of the Neptune Greater China Income Fund and Co-Fund Manager of the Neptune China Fund, alongside Lead Manager Robin Geffen 2011:

Anti-inflation: going into next year, we see the tightening cycle in China accelerating to deal with inflationary pressures both internally, especially in terms of food prices, and also externally, dealing with the wall of cheap money being created in the developed markets.

However, in contrast to the continued innovative easing in the developed markets, this 'tightening' ought to be broadly market positive as a moderating influence.

Income: as the demand for yield grows and the opportunities for it become ever scarcer, investors will seek innovative ways to earn income. We believe that they will increasingly look to realise the benefits from the dividend stream already available in China, not to mention the dividend growth, capital growth and currency appreciation offered to equity income investors in this region.


David Leduc, manager of the BNY Mellon Global Strategic Bond Fund:

Up until this point, European policy responses to the eurozone crisis have erred on the side of being reactive rather than proactive. This has led to a lack of investor confidence, which in turn has put pressure on bond spreads and on the euro.

We continue to favour Italy, given that it is in the best health of all the peripheral eurozone economies, and our outlook for German growth is also positive.

David Simner, manager of Fidelity's Euro Bond fund:

"The low interest rate environment is likely to support ongoing investor flows into the asset class as part of a hunt for yield. Ongoing stress in peripheral european economies is also likely to support flows by encouraging diversification away from government bonds and into high-quality credit.

"Nevertheless, risks remain. Austerity plans are putting downward pressure on economic growth in the developed world and the threat of another sovereign debt crisis is still high. There is also increased political risk as european policymakers formulate new legislation. Therefore bond markets still face much uncertainty.

"However, overall, a slow growth, low inflation environment is typically a sweet spot for corporate bonds and I expect positive returns over the next 12 months."

Sam Morse, manager of Fidelity's european fund:

"Europe remains rich in stock-picking ideas regardless of the pace of its economic recovery relative to other parts of the world. In this uncertain environment, I believe it is even more important to focus on the stocks that I own, as well as on uncovering new ideas that will deliver good structural growth in the future, rather than becoming too focused on the economic backdrop."


Nick Price, manager of Fidelity's Emerging Market Equities fund:

"The secular drivers of emerging markets remains intact: attractive demographics, competitive advantages from low labour costs, an abundance of natural resources, increasing prosperity, productivity gains and sound fiscal management. These are especially attractive in comparison to the developed world, which is faced with fiscal deficits, imbalances brought on by quantitative easing and a deleveraging consumer. 

"As a result, emerging market stocks have rerated in 2010 but, at this stage, I do not yet subscribe to the idea of an emerging market bubble. I continue to find attractive opportunities at reasonable valuations. Regardless of any near term volatility in equity markets, I remain extremely positive over the long term."

Teera Chanpongsang, manager of Fidelity's India Focus fund:

"Economies in emerging Asia are able to generate strong real GDP growth, driven by underlying structural growth trends such as a large labour force, growing domestic consumption and increased infrastructure spending. These provide compelling investment opportunities and should lead to strong earnings growth in the coming years. The robust growth in industrial production in the recent past has been eroding excess capacity quickly and I expect more greenfield and brownfield expansions."

This article was taken from Interactive Investor

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