As we approach the end of 2015, we’re increasingly of the view that we’re nearing the end of one investment era and the beginning of another. We expect this global trend to be positive for China, but it might have a downside for some risk assets.
Investors are starting to think twice about active share. It’s about time. While active share is important, our research shows that it is just one of several ways for skilled equity portfolios to express high conviction.
When it comes to emerging-market (EM) bonds, clients often ask us if they’re being adequately compensated for their risk. It’s a fair question, but answering it isn’t as easy as many people think.
Global :: Our overall aggregate estimates have been edging lower since the year began, and that trend now stretches into 2016 as well. We now expect 2015 global growth of 2.5%, down from our 3.1% estimate at the start of the year. Our global growth estimate for 2016 now stands at 2.9%. Just a few months ago, we were forecasting growth of slightly more than 3%.
US :: Headline consumer price inflation plummeted in 2015—a direct result of the sharp fall in energy prices. At the same time, core consumer prices actually edged up, reflecting the underlying strength in the domestic economy and rising prices for many consumer services. The uptrend in core inflation sets the stage for headline inflation to rebound in 2016, with the risk that the economy will reach the Fed’s 2% price target much sooner than policymakers or financial markets expect.
Asia :: China’s weak import data reflect slackening domestic demand. But talk of recession is overdone, given that much of the decline in imports is attributable to lower prices. Moreover, it is also a result of Chinese industry’s shift toward domestic suppliers, as the nation’s manufacturers reduce their reliance on imported material.
Latin America :: The probability of a US interest-rate hike has increased over the past month. A handful of Latin American countries have already started to tighten their own monetary policies. We expect others to follow suit this year and next.
EEMEA :: Fears of political and economic instability in Turkey were eased after the AKP’s surprisingly strong victory in elections on November 1. While the threat of a ratings downgrade has also declined in the near term, we believe a credible economic policy team is vital for the country to improve market sentiment and address pressing structural challenges.
Australasia :: A better-than-expected labor market report raises the possibility that the Australian economy is on a different track than we have been forecasting. But even after the upside surprise in 2015, we still expect a deteriorating trend to resume in 2016.
Europe :: Although the November Inflation Report was dovish and the Bank of England is in no hurry to tighten, the market is probably too optimistic on the outlook for UK interest rates. While ECB easing is likely to act as a constraint, it’s important to note that the cyclical position in the UK has more in common with the US—where the Fed is about to raise rates—than the euro area.
Alpha Fund Managers has become the initial investor in the AllianceBernstein Global Equities Fund, adding the fund to their portfolio.
The AllianceBernstein Managed Volatility Equities Fund has received a ‘Recommended’ rating from investment research house Lonsec.
Tassos Stassopoulos, who manages the AllianceBernstein Emerging Consumer Fund, discusses the strategy with the Insto Report