RAM Experts: “Heading into 2018 with High Expectations and Cool Mind”
29-Jan-2018, 16:54 / Brokerage The specialists of Rietumu Group have prepared an overview on the return of the investment funds of Rietumu Asset Management (RAM) for December.
Along with information on the structure and dynamics of the funds, the review contains the traditional analysis of the current political events and key economic factors that exert an influence on financial markets.
“High-risk assets don’t always mean high returns, but that was a case during the last year,” say RAM experts in the review. Healthy synchronous economic growth in both developed and developing countries. Earnings growth was back in Europe, while American equity expected to show double digit earnings growth for the first time since many years. Reluctance to react to growing geopolitical risks. In sum, investors got excellent return with an extremely low volatility.
US equity market enjoyed longer-ever streak of trading days without a drop not exceeding 5 per cent, beating previous record of 394 trading days. Information technology sector outperformed other sectors due to high tolerance to risk from investors. It’s worth mentioning retail sector turnaround. Almost whole year beleaguered sector faced negative sentiment. However, positive sales during Black Friday and holiday season turned back investors’ attention.
2017 was a year to remember for a large overhaul of the tax system in the U.S. Any effect from the tax reform on economic growth is uncertain. However, majority of economists agreed that the effect would be positive in the short-term and negligible in the long-term.
Investors completely got rid of political noise from Europe in their calculations after Macron won the president elections in France. As a result, Merkel’s failure to form ruling coalition in the government of Europe’s powerhouse did nothing to shatter nice performance of European assets. Moreover, incoming healthy macroeconomic data boosted the euro against the dollar.
At the end of year OPEC and Russia agreed to prolong oil production cuts in 2018. As OPEC countries plus their non-OPEC supporters maintained compliance the market likely got closely to the balance for the year. High market reaction to disruptions in the North Sea and Libya served as an evidence of narrowing gap between oil supply and demand. However, too high oil prices and growing shale oil production could derail OPEC efforts.
“Heading into 2018, investors have high expectations backed by strong fundamentals. Nevertheless, it is important to remember some time-tested principles for successful long-term investing: not to put all eggs into one basket and keep cool mind during market ups and downs,” note RAM experts.
The review on RAM and the current comments of the specialists can be found here.
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