TORONTO, Dec. 21, 2015 /CNW/ -- Manulife Asset Management has issued its annual "Year Ahead" report, identifying the main drivers of the global economy and implications for investors in 2016.
Drawing together the individual views from Manulife Asset Management's investment and economic teams on the ground in the U.S., Canada, Europe, and in markets across Asia, the report addresses the outlook for a range of investment areas and asset classes, including fixed income, equities, commodities and asset allocation.
Accompanied online by an interactive map showing global growth and inflation forecasts as well as a video featuring Chief Economist Megan E. Greene, the report is available at: www.manulifeam.com.
"The main drivers in the global economy in 2015 will continue to shape the macroeconomic environment in 2016 and beyond. These drivers are all characterized by the ideas that we live in an age of oversupply and that central bankers are the only policymakers currently poised to provide enough stimulus to significantly try to generate demand," said Ms. Greene.
Among the economic insights covered in the report:
- An oversupply of debt is constraining most governments' abilities to provide a fiscal stimulus to generate demand. Central banks have stepped in to fill the void with significant monetary easing. As a result there is an oversupply of liquidity in the macroeconomic system.
- In our view, we will continue to live in a low growth, low rate, low inflation environment for the next five years.
- Leading the global recovery in 2016 will be the United States, supported primarily by consumer demand. As households continue to deleverage and repair their balance sheets, lower oil prices will eventually start to feed into better retail sales data towards the end of the year.
- One other bright light in the global recovery among developed countries is the UK. We expect growth in the UK to average around 2.3 percent over our five-year forecast period. One potential risk to UK growth is a likely referendum on EU membership in 2016.
- Japan is unlikely to provide much spur to global growth in 2016, or the subsequent five years. In our view, we will continue to see further fiscal and monetary stimulus in Japan, but in the absence of structural reforms, we expect growth and inflation of around one percent over the next five years.
- The greatest risk to the global economic recovery is in China, which is currently trying to rebalance its economic growth model away from investments towards consumption. But that process may take longer than expected.
An asset allocation point of view, summarized by Bob Boyda, Co-head of Asset Allocation:
- Our base case for the US sees the economy continuing to plod along with no material risk of recession over the next five years; a scenario that is good for risk assets.
- Very low inflation numbers make these modest nominal returns quite respectable by historical standards. Inflation is not a risk.
- The character of a market repeats. The character of our current asset markets can best be described as a series of long, slow climbs in price followed by breathtaking downward smashes. Investors should get used to this and expect 2016 to bring more of the same.
- We continue to be mildly optimistic about the state of the global economy and therefore about risk assets like global equity, real estate and credit markets.
Views from a full range of Manulife Asset Management investment teams are also quoted in the report.
About Manulife Asset Management
Manulife Asset Management is the global asset management arm of Manulife, providing comprehensive asset management solutions for investors. This investment expertise extends across a broad range of public and private asset classes, as well as asset allocation solutions. As at September 30, 2015, assets under management for Manulife Asset Management were approximately C$393 billion (US$294 billion).
Manulife Asset Management's public markets units have investment expertise across a broad range of asset classes including public equity and fixed income, and asset allocation strategies. Offices with full investment capabilities are located in the United States, Canada, the United Kingdom, Japan, Hong Kong, Singapore, Taiwan, Indonesia, Thailand, Vietnam, Malaysia, and the Philippines. In addition, Manulife Asset Management has a joint venture asset management business in China, Manulife TEDA. The public markets units of Manulife Asset Management also provide investment management services to affiliates' retail clients through product offerings of Manulife and John Hancock. John Hancock Asset Management and Declaration Management and Research are units of Manulife Asset Management.
Additional information about Manulife Asset Management may be found at ManulifeAM.com.
Manulife Financial Corporation is a leading international financial services group providing forward-thinking solutions to help people with their big financial decisions. We operate as John Hancock in the United States, and Manulife elsewhere. We provide financial advice, insurance and wealth and asset management solutions for individuals, groups and institutions. At the end of 2014, we had 28,000 employees, 58,000 agents, and thousands of distribution partners, serving 20 million customers. At the end of September 2015, we had $888 billion (US$663 billion) in assets under management and administration, and in the previous 12 months we made more than $23 billion in benefits, interest and other payments to our customers. Our principal operations are in Asia, Canada and the United States where we have served customers for more than 100 years. With our global headquarters in Toronto, Canada, we trade as 'MFC' on the Toronto, New York, and the Philippine stock exchanges and under '945' in Hong Kong. Follow Manulife on Twitter @ManulifeNews or visit www.manulife.com or www.johnhancock.com.
SOURCE Manulife Asset Management
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