The global economic recovery still has some distance to run, meaning long-term investors should remain overweight to growth assets, according to Credit Suisse Private Banking.
An economic upswing usually lasts around five to seven years and there are plenty of reasons to think that the current economic recovery will mirror previous upturns, according to Giles Keating, global head of research for private banking and asset management at Credit Suisse.
In particular, low interest rates in larger economies such as the US and the large amounts of cash on corporate balance sheets are stimulative factors and more than offset the headwinds from the few instances of fiscal tightening, he said.
Keating recommended that long-term investors should overweight equities and commodities and underweight bonds, although tactical short-term investors should remain neutral across these classes due to a recent softening in global economic indicators.
In particular, cyclical classes such as technology and consumer stocks and some resources would be appealing in the coming months, he said.
Keating also expected the euro to rise modestly against the dollar, and added that emerging currencies would be an important currency diversifier.
Keating tempered his positive outlook in acknowledging the risks posed by the end of the second round of US quantitative easing, an economic slowdown in China, the European sovereign debt crisis and political concerns in the Middle East.
While also acknowledging the dampening effect of the strong Australian dollar on export-reliant industries such as industrials, Keating was bullish on the local market overall.
Keating said the ASX200 offered upside over the next 12 months, with long-term value supported by attractive dividend yields. These would appeal in particular to international investors facing interest rates close to zero at home, he added.
