Investing in 2018 Challenge and opportunity ahead

2017 has mostly been a positive year for investors with the bulk of assets posting significantly positive returns year-to-date. Volatility remained low and investors were not faced with the large, swift market swings of previous years.

What does 2018 have in store for investors? Will the economic expansion continue unabated?

Investing in 2018

The Big Picture

Erin Browne, Head of Asset Allocation, Investment Solutions

  • The global economy is enjoying an unusually broadbased recovery that is accelerating; inflationary pressures remain subdued
  • Monetary policy globally remains stimulative - expect developed world central banks to unwind loose monetary policy gradually and carefully
  • We see continued support for equities via stronger-than-expected earnings growth and scope for further equity multiple expansion
  • Our highest conviction views are positive stances in European and emerging market equities

Positive earnings growth have accelerated globally

Monthly forward earnings (MSCI World) from 2012 – 2017

MSCI World 12m forward earnings: 2007 - 2017

Strong corporate results, robust demand backdrop have seen earnings growth expectations accelerate in recent months

Source: UBS Asset Management, Datastream as of October 31, 2017.


EM equities: An attractive long-term proposition at current valuations

Geoffrey Wong, Head of Global Emerging Markets and Asia Pacific Equities

  • Forecasts suggest earnings growth in emerging markets in 2017 will be strongest since 2010
  • EM growth is being driven increasingly by domestic demand and intra EM trade
  • Within EM equity markets, secular growth sectors such as IT and consumer are displacing ‘old EM’ commodity sectors
  • Growing evidence that some EM economies are moving firmly up the value chain

Sectors like internet and consumption support domestic growth story

MSCI EM sector weights (2007 vs 2017)

MSCI EM Trailing EPS (USD)

Source: UBS Asset Management, FactSet, as of September 29, 2017


What are the other themes explored?

Which mega trends will impact real estate needs?

What is key to successful investing in private credit?

What's China's new path?