Dubai – Mubasher: BofA Merrill Lynch Global Research today released its outlook for the markets in 2016, forecasting a year of modest global and U.S. economic growth, the start of a slow, emerging markets recovery and single-digit stock returns led by high-quality cyclicals.
However, with the world’s two largest economies – U.S. and China – set to diverge on monetary policy and a contrarian expectation of further weakness in China, next year’s market outlook is fraught with credit, rates and currency risks.
BofA Merrill Lynch presented their 2016 Year Ahead Outlook today at events held in New York and London, with similar events this week in Tokyo, Hong Kong, Sydney, Singapore, Sao Paulo, and Mexico City. Analysts from the top-ranked global research firm summarized their views on the U.S. and global economies with tempered optimism. When the Federal Reserve begins raising the Federal funds rate, monetary policy is expected to take center stage as the key theme for 2016. However, low inflation, improving fundamentals and supportive policy should bode well for global economic expansion, consumers and opportunistic investors.
Cautiously bullish, the firm’s house view is for stronger growth and higher rates; however, virtually every sector is facing macro risks and innovation disruptors. Value investing is expected to outperform growth beginning in 2016, and Main Street is expected to outperform Wall Street as the tailwind of low rates, oil prices and rising employment continues to benefit consumers, according to the report issuer.
“We’re seeing an aging bull market with a lot of upside potential in it, but also the beginning of slow, steady growth in the capital markets and innovation-led shifts in business cycle,” said Candace Browning, head of BofA Merrill Lynch Global Research. “The greatest opportunities for investors may be found among carefully selected, healthy dividend-paying stocks and thematic investments in innovators reshaping market dynamics over the next decade.”
