BCA Research gives an outlook for 2013:
- Positive surprises are likely in three important areas: the euro area crisis, Chinese economic growth and U.S. fiscal trends.
- The euro area has made good progress. The region should exit recession during 2013, but it will be several years before we will know for sure if the euro can survive.
- The Chinese economy has already started to improve and fears of a hard landing will continue to fade.
- U.S. politicians will not send the economy over the fiscal cliff.
- The U.S. Debt Supercycle ended in the private sector in 2007, but still lingers on in the government sector. Most likely it will require a market crisis to force politicians to reform.
- Global economic growth should improve in the coming year, but not by enough to put pressure on inflation.
- The search for yield will remain an intense investment theme, implying that high-dividend stocks and fixedincome spread product should continue to do well in 2013.
- Global equities should continue to grind higher against a backdrop of reasonable valuations and easy money. Nevertheless, we only look for total returns from a global equity portfolio to be around a modest 6%.
- Euro area equities should outperform those of the U.S. An improved global economy should also translate into better performance from emerging market stocks.
- Commodities should do better in 2013 on the back of stronger demand. However, gold is likely to
- trade in a range. Commodity prices look vulnerable from a longer-run perspective given their elevated level and the beneficial impact of technology on supply.
