hongkongen
Investment strategists most positive on equities

Investment strategists most positive on equities

19-01-2017 | Insight

Investment experts Bob Homan (ING), Han Dieperink (Rabobank) and Gerben Jorritsma (ABN Amro) are in agreement that equities will be the most lucrative asset class for investors in 2017. But they all also have individual views on which other areas they favor, varying from high yield bonds and commodities to real estate.

  • Maarten van der Pas
    Maarten
    van der Pas
    Investment Writer at Robeco

Are you ready to rumble? The three investment experts and Robeco Chief Economist Léon Cornelissen entered the arena like gladiators, each making a short pitch in which they tried to convince the asset managers, investment advisors and bankers in the audience of their views on the financial markets and investing in general.

Strong economic recovery

“2017 will be the year when things get back to normal with steady global economic growth and rising inflation”, stated Gerben Jorritsma. The Global Head of Investment Strategy & Portfolio Expertise at ABN AMRO Bank sees evidence that confidence among consumer and producers has returned.

Jorritsma made a few distinctions between his ideas and Robeco's economic outlook. “ABN Amro expects a strong economic recovery whereas Robeco Solutions Chief Investment Officer Lukas Daalder has a more moderate view. “Perhaps the economy will grow more and inflation will increase further than we are now predicting. The economy does not follow the calendar year and the third quarter of 2016 was the turning point for the market. Fundamental factors also carry more weight than political factors. It's only the facts that count.

So, according to Jorritsma, 2017 will remain the year of equities for investment portfolios. “I expect to see double digit earnings growth for stocks. And as long as Treasury yields stay below 3% and the European ten-year at 1%, bonds will remain out of favor.”

Watch out for reflation

“Unseen dangers always pose the biggest threat”, Han Dieperink, Chief Investment Officer of Rabobank Retail & Private Banking, reminded the audience. “Investors are focused on the more obvious issues of Donald Trump and Brexit. But the political risks of the Trump administration are not so great and I don't predict populist victories in the various European elections either.”

The unseen danger, according to Dieperink, is the risk that central banks stop their reflation efforts. “At the moment it is still a case of short and long-term rates being structurally lower than the level of economic growth, but a central bank that hikes rates aggressively could still ruin everything.”

Dieperink does not expect 2017 to differ greatly to 2016 when it comes to investing. “Equities will deliver above-average returns, while bond performance will be below average. But the outlook is not negative for all bonds, high yield is an exception.

‘Helicopter money would be an interesting experiment’

Market sentiment is too positive

“The economy is doing pretty well”, said Bob Homan optimistically. “Productivity has been stagnant for ten years and is now picking up again.” But the head of ING's Investment Office is cautious too. “Trump's plans could cause the economy to overheat, which could result in inflation and rising national debt. Investors are aware of this. Nor do I believe in double-digit earnings growth for stocks like Gerben Jorritsma does. I think growth will be around 5%.

Homan advises opting for short duration (interest rate sensitivity) when it comes to bonds. “Bonds generate limited returns. There are some gains to be made, high yield and inflation-linked bonds still offer potential profits of 1.5% to 2%. These segments of the bond market are interesting.” Homan does feel that market sentiment is extremely positive at present. “We are neutral on equities. This is a highly contrarian view.”

No helicopter money

Jorritsma, Dieperink, Homan and Cornelissen are given a number of hypotheses. None of them expect there to be any helicopter money in 2017. Homan and Jorritsma both expect inflation to rise. Dieperink suggests that the European Central Bank (ECB) has in fact already started tapering. “There will be little monetary activity until the German elections in the autumn. After that, accommodative monetary policy will be phased out more quickly.” Cornelissen is disappointed that money will not be distributed to the citizens of Europe. “It would be an interesting experiment. Although free money is often stashed away and so does not really help stimulate the economy.

The audience were also able to vote on the hypotheses. Almost half of those present expect the Brexit to be delayed by a year. “I actually sort of hope it will be postponed”, said Homan. “But the question is becoming increasingly irrelevant. The UK will be OK, as will Europe.” Jorritsma is aware that the United Kingdom could circumvent the regulations to leave the European Union. “Which could also cast doubt on the issue of British parliamentary approval.”

All four expect equities to perform best in the year to come. Apart from that they all have their own ideas. After equities, Homan is most positive on high yield bonds. Jorritsma also mentions real estate and commodities as profitable asset classes. Dieperink is not positive on commodities. “And on this point, I do actually agree with Dieperink”, quipped Cornelissen.

This article is part of our Outlook 2017 event
This article is part of our Outlook 2017 event
Overview of all articles

Important information

The contents of this document have not been reviewed by the Securities and Futures Commission ("SFC") in Hong Kong. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice. This document has been distributed by Robeco Hong Kong Limited (‘Robeco’). Robeco is regulated by the SFC in Hong Kong.
This document has been prepared on a confidential basis solely for the recipient and is for information purposes only. Any reproduction or distribution of this documentation, in whole or in part, or the disclosure of its contents, without the prior written consent of Robeco, is prohibited. By accepting this documentation, the recipient agrees to the foregoing
This document is intended to provide the reader with information on Robeco’s specific capabilities, but does not constitute a recommendation to buy or sell certain securities or investment products. Investment decisions should only be based on the relevant prospectus and on thorough financial, fiscal and legal advice. Please refer to the relevant offering documents for details including the risk factors before making any investment decisions.
The contents of this document are based upon sources of information believed to be reliable. This document is not intended for distribution to or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation.
Investment Involves risks. Historical returns are provided for illustrative purposes only and do not necessarily reflect Robeco’s expectations for the future. The value of your investments may fluctuate. Past performance is no indication of current or future performance.

Subjects related to this article are:

Disclaimers

1. General
Please read this information carefully.

This website is prepared and issued by Robeco Hong Kong Limited ("Robeco"), which is a corporation licensed by the Securities and Futures Commission in Hong Kong to engage in Type 1 (dealing in securities); Type 4 (advising in securities) and Type 9 (asset management) regulated activities. This website has not been reviewed by the Securities and Futures Commission or any regulatory authority in Hong Kong.

2. Important risk disclosures
Robeco Capital Growth Funds (“the Funds”) are distinguished by their respective specific investment policies or any other specific features. Please read carefully for the risks of the Funds:

  • Some Funds are subject to investment, market, equities, liquidity, counterparty, securities lending and foreign currency risk and risk associated with investments in small and/or mid-capped companies.
  • Some Funds are subject to the risks of investing in emerging markets which include political, economic, legal, regulatory, market, settlement, execution, counterparty and currency risks.
  • Some Funds may invest in China A shares directly through the Qualified Foreign Institutional Investor (“QFII”) scheme and / or RMB Qualified Foreign Institutional Investor (“RQFII”) scheme and / or Stock Connect programmes which may entail additional clearing and settlement, regulatory, operational, counterparty and liquidity risk.
  • For distributing share classes, some Funds may pay out dividend distributions out of capital. Where distributions are paid out of capital, this amounts to a return or withdrawal of part of your original investment or capital gains attributable to that and may result in an immediate decrease in the net asset value of shares.
  • Some Funds’ investments maybe concentrated in one region / one country / one sector / around one theme and therefore the value of the Fund may be more volatile and may be subject to concentration risk.
  • The risk exists that the quantitative techniques used by some Funds may not work and the Funds’ value may be adversely affected.
  • In addition to investment, market, liquidity, counterparty, securities lending, (reverse) repurchase agreements and foreign currency risk, some Funds are subject to risk associated with fixed income investments like credit risk, interest rate risk, convertible bonds risk, ABS risk and the risk of investments in non-investment grade or unrated securities and the risk of investments made in non-investment grade sovereign securities.
  • Some Funds can use derivatives extensively. Robeco Global Consumer Trends Equities can use derivatives for hedging and efficient portfolio management. Derivatives exposure may involve higher counterparty, liquidity and valuation risks. In adverse situations, the Funds may suffer significant losses (even a total loss of the Funds’ assets) from its derivative usage.
  • Robeco European High Yield Bonds is subject to Eurozone risk.
  • Investors may suffer substantial losses of their investments in the Funds. Investor should not invest in the Funds solely based on the information provided in this document and should read the offering documents (including potential risks involved) for details.

3. Local legal and sales restrictions
The Website is not directed at any person in any jurisdiction where (by reason of that person’s nationality, residence or otherwise) the publication or availability of the Website is prohibited. Persons in respect of whom such prohibitions apply or persons other than those specified above must not access this Website. Persons accessing the Website need to be aware that they are responsible themselves for the compliance with all local rules and regulations. By accessing this Website and any of its pages, you acknowledge your agreement with understanding of the following terms of use and legal information. If you do not agree to the terms and conditions below, do not access this Website or any pages thereof.

The information contained in the Website is being provided for information purposes.

Neither information nor any opinion expressed on the Website constitutes a solicitation, an offer or a recommendation to buy, sell or dispose of any investment, to engage in any other transaction or to provide any investment advice or service. The information contained in the Website does not constitute investment advice or a recommendation and was prepared without regard to the specific objectives, financial situation or needs of any particular person who may receive it. An investment in a Robeco product should only be made after reading the related legal documents such as management regulations, prospectuses, most recent annual and semi-annual reports, which can be all be obtained free of charge at www.robeco.com/hk/en and at the Robeco Hong Kong office.

4. Use of the Website
The information is based on certain assumptions, information and conditions applicable at a certain time and may be subject to change at any time without notice. Robeco aims to provide accurate, complete and up-to-date information, obtained from sources of information believed to be reliable. Persons accessing the Website are responsible for their choice and use of the information.

5. Investment performance
No assurance can be given that the investment objective of any investment products will be achieved. No representation or promise as to the performance of any investment products or the return on an investment is made. The value of your investments may fluctuate. The value of the assets of Robeco investment products may also fluctuate as a result of the investment policy and/or the developments on the financial markets. Results obtained in the past are no guarantee for the future. Past performance, projection, or forecast included in this Website should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance. Fund performance figures are based on the month-end trading prices and are calculated on a total return basis with dividends reinvested. Return figures versus the benchmark show the investment management result before management and/or performance fees; the fund returns are with dividends reinvested and based on net asset values with prices and exchange rates of the valuation moment of the benchmark.
Investments involve risks. Past performance is not a guide to future performance. Potential investors should read the terms and conditions contained in the relevant offering documents and in particular the investment policies and the risk factors before any investment decision is made. Investors should ensure they fully understand the risks associated with the fund and should also consider their own investment objective and risk tolerance level. Investors are reminded that the value and income (if any) from shares of the fund may be volatile and could change substantially within a short period of time, and investors may not get back the amount they have invested in the fund. If in doubt, please seek independent financial and professional advice.

6. Third party websites
Following links to any other off-site pages or websites of third parties shall be at the own risk of the person following such link. Robeco has not reviewed any of the websites linked to or referred to by the Website and does not endorse or accept any responsibility for their content nor the products, services or other items offered through them. Robeco shall have no liability for any losses or damages arising from the use of or reliance on the information contained on websites of third parties, including, without limitation, any loss of profit or any other direct or indirect damage.

7. Limitation of liability
Robeco as well as (possible) other suppliers of information to the Website accept no responsibility for the contents of the Website or the information or recommendations contained herein, which moreover may be changed without notice.
Robeco assumes no responsibility for ensuring, and makes no warranty, that the functioning of the Website will be uninterrupted or error-free. Robeco assumes no responsibility for the consequences of e-mail messages regarding a Robeco (transaction) service, which either cannot be received or sent, are damaged, received or sent incorrectly, or not received or sent on time.
Neither will Robeco be liable for any loss or damage that may result from access to and use of the Website.

8. Intellectual property
All copyrights, patents, intellectual and other property, and licenses regarding the information on the Website are held and obtained by Robeco. These rights will not be passed to persons accessing this information.

9. Privacy
Robeco guarantees that the data of persons accessing the Website will be treated confidentially in accordance with prevailing data protection regulations. Such data will not be made available to third parties without the approval of the persons accessing the Website, unless Robeco is legally obliged to do so. Please find more details in our Privacy and Cookie Policy.

10. Applicable law
The Website shall be governed by and construed in accordance with the laws of Hong Kong. All disputes arising out of or in connection with the Website shall be submitted to the exclusive jurisdiction of the courts of Hong Kong. 

Please click “I agree” button if you have read and understood this page and agree to the Disclaimers above and the collection and use of your personal data by Robeco, for the purposes for which such data is collected and used as set out in the Privacy and Cookie Policy, including for the purpose of direct marketing of Robeco products or services. Otherwise, please click “I Disagree” to leave the website.

I Disagree