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A global tour with John Chatfeild-Roberts
by Dylan Lobo on Jan 07, 2014 at 13:59
‘Wage inflation in China has also escalated, which combined with the energy advantage is helping US companies become considerably more competitive. As a result, US corporates are in good shape but they need to have the confidence to invest their cash balances, and this is definitely taking quite a time.’
Japan: inflationary policies are delivering
‘Japan has been struggling with deflation for many years but this looks to be changing as a result of a policy of unprecedented monetary stimulus that was launched by the Bank of Japan under the direction of Japanese Prime Minister Shinzo Abe.
‘There are signs that mild inflation is being successfully injected into the veins of their economy. The stock market has responded with a renewed sense of optimism and valuations are reasonable relative to other developed markets. We believe that Japanese equities have the potential to deliver decent returns to investors in 2014.’
‘As China’s economic growth slows and its focus switches towards targeting more domestically orientated growth, the world is again enjoying a deflationary influence. As the rate of its commodity consumption wanes, industrial commodity prices could fall.
‘This would once more lower price pressures in the developed world, meaning inflation targeting central banks would be likely to keep their foot firmly on the expansionary policy pedal for longer. The extra money printing will probably end up pushing asset prices higher.’
UK: opportunities come at a price
‘The UK economy’s health is improving, but it still has the same backdrop as the US, namely significant monetary easing.
‘UK government stimulus through the provision of mortgage guarantees has kick-started parts of the property market and this is now feeding through into other sectors of the economy which are benefiting from an improvement in consumer demand. Employment levels are improving, the consumer is feeling more confident, and the UK economy is gaining traction.
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