Investment Outlook: What Next for Equities?

Morningstar OBSR's market commentator Andy Brunner reviews the outlook for stocks, as well as his views on bonds, property, commodities and currencies

Andy Brunner 11 November, 2013 | 12:00AM

Equities

Despite growth slowing in the emerging world, an acceleration in activity in the developed countries next year is expected to engender a gradual rebound in the global economy. Policy responses by governments and central banks should ensure recovery becomes entrenched and the consensus forecast is for a return to trend global growth in 2014.

Bond tapering still lies ahead, be it soon or in March, and with valuations in the US at least a little pricey, this may generate some near-term equity market turbulence. Even so, central bank actions have helped lower perceived systemic risks and investors are beginning to rebuild equity weightings and an overweight position is retained on a medium term view.

For the long run, we continue to recommend investors seek out good quality companies with healthy balance sheets and strong cash flows. The focus should be increasingly on companies with exposure to growing markets be they cyclical, defensive or financial, and irrespective of country, sector and size. Additionally, yield will remain important in a low interest rate world and some higher yielding stocks, albeit only those with rising dividends, remain favoured.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Andy Brunner

Andy Brunner  is Head of Investment Strategy, Morningstar UK

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