Invesco Canada blog

Insights, commentary and investing expertise

Global economy: Global economy expected to grow with low inflation in 2019


Chief Economist, Invesco Ltd.
December 14, 2018

Subject | 2019 Investment Outlook Series | Institutional | Invesco | Macro views

Key takeaways

  • 2018 has been a year of turmoil, but, 2019 promises to be much calmer, in my view.
  • I believe the Federal Reserve should be successful in positioning the US economy for several more years of expansion.
  • Monetary policy invariably dominates fiscal policy in the determination of inflation

2018 has been a year of turmoil with weakness in the bond markets and two significant sell-offs in equity markets. In between there were crises in Venezuela, Argentina and Turkey; ongoing Brexit negotiations; a strong rise in the price of oil; and disruptions created by US President Donald’s Trump’s repeated trade measures — all set against a backdrop normalising US interest rates. However, 2019 promises to be much calmer, in my view.

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Federal reserve, economy, fiscal policy

Emerging markets: No shortage of reasons to be cautious in 2019


Head of Emerging-Markets Equities, Invesco Hong Kong Ltd.
December 14, 2018

Subject | 2019 Investment Outlook Series | Active management | Institutional | Macro views

Key takeaways

  • Emerging Markets (EM) face high uncertainty due to US equity market volatility and trade wars.
  • Yet we believe EMs as an asset class looks attractive as they are quite undervalued.
  • Quality has been out of favor in the EM markets in 2018, but we anticipate a reverse to the mean in the near future.

Emerging markets are one of the few asset classes where informational inefficiencies provide a fertile ground for bottom-up stock pickers (i.e., active investors) to add value. In our opinion, demographics, technology, decreased reliance on commodities and globalization all provide visible long-term growth potential.

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Waterfront, tourism

Multi-asset: The prolonged global expansion could continue if fiscal and monetary policies remain supportive


Product Director, Multi Asset
December 14, 2018

Subject | 2019 Investment Outlook Series | Industry views | Institutional | Invesco | Macro views

Key takeaways

  • We take a two- to three-year view of the world when building our central economic thesis.
  • We believe it is vital to consider both cyclical and structural forces in building this thesis.
  • We believe that all of our ideas can make a positive return in our central economic scenario to ensure we have ideas that can excel in various economic conditions. However, it is important to note that our ideas do not derive from it.

2018 has been a relatively volatile year, however this has been limited to bouts of volatility while, rather surprisingly, levels of market volatility overall have remained fairly subdued.

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Alternatives: Alternatives may be an answer to challenging investment environments


Alternatives Investment Strategist
December 14, 2018

Subject | 2019 Investment Outlook Series | Industry views | Institutional | Invesco | Macro views

Key takeaways

  • Expect lower equity returns, increased volatility and rising interest rates in 2019.
  • Alternative investments can help investors weather a more challenging environment.
  • Investors need to be proactive and avoid the mistake of adding alternatives reactively.

Following an idyllic 2017, when equity markets were characterized by strong returns and low volatility, we were reminded in 2018 that markets are often volatile and can go down just as easily as up. In 2019, I believe investors should be preparing themselves for lower equity returns, increased volatility and rising interest rates. Given this outlook, investors would be well-served (in my opinion) to consider the addition of alternative investments to their portfolios.

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Wall Street Bull, Statue

Real estate: The outlook for real estate fundamentals is positive, but risks remain


Managing Director, Head of Global Real Estate, Managing Director, Head of Global Securities, Invesco Real Estate
December 14, 2018

Subject | 2019 Investment Outlook Series | Industry views | Institutional | Invesco | Macro views

Key takeaways

  • Risks today are crystallizing; many are more global in nature.
  • Pricing remains attractive; however, yield/cap rate compression is largely behind us.
  • Total returns in 2019 are likely to be driven by net operating income growth.

Strong growth in developed economies should continue to support favorable real estate fundamentals in the near term. The baseline scenario remains very positive, and global listed equities’ earnings yields are providing a positive spread over local government bonds, a sign that real estate is still fairly priced. Yet macro risks to the outlook are perhaps now greater today than in prior years; many are increasingly global in nature. They include rising populism, an escalation of the US-China trade war, a monetary policy normalization misstep, a disorderly Brexit or a China debt crisis.  Should any one of them materialize, it would have the potential to derail the global growth outlook to a measurable degree.

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city planning, real estate

Chinese equities: What is in store for Chinese equities in 2019?


Chief Investment Officer, Asia ex Japan
December 14, 2018

Subject | 2019 Investment Outlook Series | Industry views | Institutional | Invesco | Macro views

Key takeaways

  • We believe Chinese equities represent some of the best structural opportunities across global markets.
  • Following the correction in 2018, we believe the risk-reward picture has turned exceptionally favorable.
  • We believe corporate fundamentals will remain strong given solid support from the domestic market.

There has been a disconnect between sentiment and fundamentals when it comes to Chinese equities in 2018. Market sentiment has been weak (driven by the changing relationship with the US and moderating growth), while economic fundmentals remained decent. China was on track to deliver its growth target despite moderation, widely known as a result of economic transitioning towards high quality growth.

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