Global Reflation Provides Boost for Equities says Queen's Bank

Coutts Bank explains risk assets have benefited from higher levels of inflation, but warns that good value opportunities are getting harder to find

Coutts 18 July, 2017 | 2:16PM
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Morningstar's "Perspectives" series features investment insights from third-party contributors. Here, Coutts Bank shares its views on global growth and equity expectations.

The normalising global economic environment, with growth picking up and interest rates rising, has been positive for risk assets and has pushed equity and credit valuations up. We believe this benign environment will continue for a while but are watching closely for signs of slowdown.

Reflation implies that growth and inflation should normalise from their low mid-2016 levels, followed by central bank normalisation. This environment is typically positive for risky assets such as equities, in particular information technology and financials, and high yield bonds. We expect this trend, which started in the US, to persist in the medium term and become more prominent in Europe.

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Coutts  Coutts provides customised solutions for clients private banking and wealth management needs.

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