Thursday 22nd December 2011
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Russell Investments, a global equities investor, says 2012 will continue to be driven by global deleveraging, while Asia and the US will drive modest levels of growth and recovery.
Russell’s 2012 Annual Global Outlook predicts higher unemployment and volatility and lower standards of living and returns on investment, which will be predominately driven by global deleveraging and European policy errors and inaction, it said in a statement.
“The main danger for 2012 is a significant slowdown in export demand as Europe slides into recession,” said Andrew Pease, chief investment strategist, Asia Pacific.
“While Asia will not be immune to tighter credit conditions in Europe, we do see some positive news coming out of the region. Inflation appears to have peaked, share market valuations are attractive across the region and China, specifically, has scope to significantly easy monetary conditions.”
The ongoing crisis in Europe will likely sap the strength of emerging market assets, at least temporarily, as these emerging economies are weighed down by the tightening of credit globally.
“We anticipate continued volatility, especially as Western democracies reconcile the need for austerity with the need to support economic growth and provide for rising outlays on entitlements,” said Pete Gunning, global chief investment officer.
“We do expect to see more clarity around the impacts of the proposed solutions to this year’s headline-dominating policy issues globally.”
The firm’s investment strategists said targets for the equity markets at the end of 2012 include a US ten-year Treasury yield target of between 2.5 and 2.75 percent, S&P 500 Index target of 1300, and a Russell index target of 720.
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