Barclays recommends investors position for a lower growth environment
22 September 2015 - 10:30PM
Business Wire
Global Outlook report sees a period of
protracted weakness in China, led by the need to rebalance the
economy away from an unsustainably high rate of investment
Weak global growth, driven by weakness in emerging markets,
especially in China, drove the Q3 market selloff, according to
Barclays’ latest flagship quarterly research publication Global
Outlook: Position for mediocre growth. With China deceleration
unlikely to reverse any time soon, and developed market growth
expected to remain steady but not spectacular, investors should
tilt their equities exposure toward a more neutral position, from
the modest overweight position recommended in the last Global
Outlook.
“China faces an extended period of strong headwinds related to
the long-awaited need to rebalance its economy away from
unsustainably high investment spending,” said Ajay Rajadhyaksha,
Head of Macro Research. “The prospect of further weakness in China,
together with mediocre growth in advanced economies, suggests
investors should position for a low growth environment in the
months to come. There is no quick bounce-back coming.”
While the growth of advanced economies has been subpar by
historical standards, the global consumer has been a source of
strength in the US, Europe and Japan, with consumption helped by
tightening labor markets and weak inflation. Tighter labor markets
in the US, the UK and Japan mean that central banks may be more
cautious about further monetary policy accommodation, despite a
subdued inflationary outlook driven by softer demand and excess
capacity in China and continental Europe. Government bonds appear
less attractive as a ‘safe haven’ than during earlier stages of the
recovery.
Valuations in most broad asset classes seem fair, but not
particularly attractive. Equity valuations were improved by the Q3
sell-off, but they are not priced at a compelling discount. Credit
valuations have also improved as a result of a slower sell-off, and
present opportunities as spreads have widened and underlying
fundamentals remain strong.
Other recommendations in the Global Outlook include:
- Oil prices are likely to consolidate near current levels for
the next few months
- Continue to expect US dollar strength and downside for Euro and
commodity currencies
- Within equities, the European stock market looks cheap against
the US
Barclays’ Global Outlook report, published quarterly, provides
an assessment of all major economies and markets, and outlines
recommendations for investors.
Barclays is an international financial services provider engaged
in personal, corporate and investment banking, credit cards and
wealth management with an extensive presence in Europe, the
Americas, Africa and Asia. Barclays’ purpose is to help people
achieve their ambitions – in the right way. With 325 years of
history and expertise in banking, Barclays operates in over 50
countries and employs over 130,000 people. Barclays moves, lends,
invests and protects money for customers and clients worldwide. For
further information about Barclays, please visit our website
www.barclays.com.
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version on businesswire.com: http://www.businesswire.com/news/home/20150922005747/en/
Barclays CapitalJames White, +44 (0) 20 7773
2800james.xa.white@barclays.comorAndrew Smith, +1
212-412-7521andrew.x.smith@barclays.com
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