You mean it is time to load up with equities.
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Goldman Sachs has adjusted its global aksjesyn to “overweight” for the next three and twelve month waiting earnings growth, yields and high risk premiums to support the increased returns, according to an update dated 5 September.
This happens after the broad US-S & amp; P 500 is up near nine percent and the Oslo Stock Exchange over twelve percent so far this year.
In three months term the global equity returns of 3.3 percent, according to Goldman. In the twelve month term expected return is now 12 percent.
“To share our longer view very positively., We expect solid performance from all the major regions, primarily driven by earnings growth and dividends,” the the note from brokerage house’s portfolio strategy team.
Height expectations are revised for key indices in all regions except Japan.
After the European Central Bank’s surprise rate cut and announced measures Thursday also risk in the stock market from higher bond yield declined, according to Goldman Sachs.
Also read: ECB left off enough a bomb and – a sign of how deep the crisis is
Although the measures signaling weaker growth and inflation outlook for the euro zone, mean the brokerage that much is already priced into.
“On the whole, we believe the net effect of the political measures here will be positive for equity markets,” it says.
Goldman Sachs maintains, however, an “underweight” -anbefaling on corporate bonds over the next three – and twelve months.
“We expect spreads to shrink, but given the already tight levels, rising yields on government bonds will probably dominate the return, especially for American Investment Grade Credit”, it says.
The exception is American high yield bonds, which recommended a predominance of relative to investment grade.
Goldman Sachs also maintains an underweight in government bonds.
“We expect the yield to increase due to sustained high growth in the United States and rising inflation, a decline in deflation worries in Europe and support for inflation expectations from the ECB measures, “writes the brokerage.
In view of the ECB’s actions before the weekend , Goldman economists lowered their expectations for German government bonds at 1.30 posent at the end of the year.
When it comes to commodity keeps Goldman neutral on both the three and twelve month term, with significant variation in index levels.
“We like nickel, palladium, zinc, and aluminum but the downside for copper and gold, “the.
The brokerage expects a North Sea oil (burned) at $ 105 a barrel over the next six months, falling to $ 100 a barrel for the twelve-month term.
Economic activity in the United States is expected to grow by 2.1 percent this year, rising to 3.1 percent in 2015 and 3.0 percent in 2016 and 2017.
The same growth in Europe is expected to be 0.8 per cent this year, 1.4 percent next year, 1.7 percent in 2016 and 1.6 percent in 2017.
Growth in China is expected to be 7.3 percent in 2014, 7.6 percent next year and in 2016 and 7.4 percent in 2017.
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