Investec’s Jeremy Gardiner writes a good report on their views of the investment world for 2015, titled Healing, but some parts still hurt. The Key points from this report are as follows:
2014 started with such promise, but soured with geopolitical unrest mainly in the Middle East and Ukraine. Emerging markets struggled economically as US withdrew its stimulus from the US economy.
So what’s hot or not for 2015?
The US is building muscle again: An economic recovery is looking sustainable despite a weaker world. US exports are suffering from a slower China and weaker Europe, but should be partially offset by lower oil prices. Employment levels are back above the 2007/08 peak and slower global growth should see interest rates remain lower longer.
Europe is still a challenge: The IMF now sees a 40% chance of a triple-dip recession and a 30% chance of deflation. Germany is slowing and Europe needs quantitative easing, but the Germans are saying no. Other than Britain that is now booming, the rest of Europe is sinking back into a slump.
No Hard landing in China: Growth is slowing slightly to 7% in 2015, which is good. But, numerous problems in their property market and banking system persist which is a concern. The economy is changing to more consumer driven as labour costs have risen significantly.
Attractive Africa: Global investment is growing as it’s been seen as politically far more stable. Ebola was a major scare but appears to be being brought under control.
SA rating downgrades: Lower global ratings of our debt will deter foreign investors. This highlights the leadership crises and we need to get the right people working in government.
Parliament is becoming more vigilant: Unrest in parliament cannot be condoned but the unlikely but effective alliance of the DA and EFF appears to be doing a good job of grinding the President and ANC down in Parliament. Hopefully this will lead to government choosing the path of least resistance and making better choices.
2015 outlook: Global market negative sentiment is not growing. Europe should recover as quantitative easing is introduced. With a combination of improving global growth, lower oil prices and longer low interest rates, this should bode well for a happier 2015.