Mary Pieterse-Bloem, Associate Professor at Erasmus School of Economics and global head of fixed income strategy & portfolio management at ABN AMRO Private Banking International, presented the Outlook of ABN AMRO for the second half of 2018.
The key message of her story is that there are numerous of threats that could increase stock market volatility. However, in the meantime, the world economy is going in the right direction. This is good news for shareholders, but not for bond holders. The interest rate is expected to remain high, while coupons are low. As a result, ABN AMRO gives the same advice as it gave half a year ago: to create a robust, and international investment portfolio.
According to the Outlook, China and the US are performing really well and Europe, which experienced a small downturn at the beginning of 2018, will realise an above-average growth. The world economy itself will grow with 3.9%. However, as central banks are expected to conduct a more restrictive policy now the economic outlook is prosperous, the growth is expected to be lower next year, namely 3.5% growth. The political distress that is experienced worldwide will not change the broad economic picture, which consists of synchronised growth in the world and a small increase in inflation.
Furthermore, ABN AMRO does not expect that Italy will leave the EU and expects that the country will meet its bond obligations in euros. Thus, the high yields will be realised. However, this process will be accompanied by high volatility. Nevertheless, even when Italian bonds will be downgraded to below investment grade, this will not have a significant influence on the world economy.
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Read the whole press release on: https://www.iexprofs.nl/Nieuws/278991/ABN-AMRO-Private-Banking/ABN-AMRO-houdt-vast-aan-beleggingskoers.aspx (Dutch only)