ANZ Smart Choice Super Investor Update : Member Update Winter 2014
10 Outlook for the remainder of 2014 We believe low interest rates across developed markets and still-low inflation will support global growth. This fares well for our preference for growth assets over defensive assets such as bonds and cash. In particular, we favour global developed market shares which we expect will benefit the most from the expected pickup in world growth. Despite the recent rally across emerging markets, we believe the outlook for the sector remains relatively challenged. Fundamentals for commodity producing countries remain poor, while concerns persist over economies with large ‘twin’ fiscal and external deficits. Lastly, concerns over China’s transition to a market-based economy means investors will continue to demand a higher risk premium when investing in China and other Asian markets. Within defensive assets, we have a preference for global bonds over local bonds as central bank efforts in Europe and Japan will likely benefit the former, while a likely rise in yields should see Australian bonds underperform. We believe the Australian dollar is clearly overvalued and has remained elevated due to the search for yield. We believe this theme is nearing an end as we anticipate global growth to strengthen. This should see the Australian dollar fall towards its fair value of US80-85c as we approach the start of US rate rises. 10 10 Lifestage investments See how we do the work for you, so you can relax and enjoy the ride.
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