Market conditions are improving, with opportunities for profits in the steadying emerging markets and sustained rallies in the US and Asian equity markets, according to the Putnam Investments Capital Markets Outlook report.
Emerging markets outperformed developed and international markets in the first quarter of this year, with growth in energy, natural resources and materials, and investors should increase their share allocation to these areas, Putnam said.
Government stimulus in China will lead to higher Asian markets, with positive results in the first quarter.
The rally in US equity markets corresponded to historic turning points for the stock market, rather than a temporary upswing in the frame of last year. The rally may end up erasing the losses in the broad-market averages from the last year to date.
Financials are also expected to stabilise if not strengthen due recent policy measures likely to improve the health of key firms in the sector.
Measures by the Treasury and Federal Reserve to restart credit markets should lead investors to favour securitised credits, such as mortgage-backed securities and collateralised mortgage obligations, according to the report.
Meanwhile, Marvin & Palmer chairman and portfolio manager — principal David Marvin, believes the worst of the global financial crisis is behind us.
At an Equity Trustees adviser briefing last week Marvin said there were signs of “green shoots” globally showing an improvement in market confidence.
“The global financial crisis that we officially went into on September 15 (2008) is easing. We’re coming out of it,” Marvin said.
“The level at where the markets were back at September 15 is where we are heading back to.”
With over 44 years experience managing money, Marvin said the current global financial crisis was one of the worst financial downturns he had worked in. However, he said investment opportunities existed in emerging markets and technology, with both sectors looking attractive.
“Interestingly, Australia looks remarkably like an emerging market and will continue to benefit from China,” Marvin said. “Of the larger developed markets, Australia is perhaps the most exciting.”
– with additional reporting by Jayson Forrest.
