Despite recent volatility, over the longer term our focus on value rather than price sees major asset classes in the ‘cheap’ and ‘fair value’ range as evident in our Tipping Points table below.
In the shorter term, financial markets could be punctuated by further bouts of volatility similar to those we saw this month and in September 2015.
A potential headwind for share markets in the near term is the prospect that corporate earnings and growth forecasts will be below market expectations in the coming reporting period.
This could drive higher levels of market volatility.
Our expectations for emerging markets align with those for developed markets, although we expect they will be more volatile both to the upside and the downside. The fortunes of these markets remain dominated by the Chinese economy and actions of Chinese authorities in managing the transition of the world’s second largest economy.
The listed real estate (REIT) market remains in the ‘fair value’ range from a long term perspective. This asset class is also likely to experience volatility in line with the share market in the shorter term but to a slightly lesser extent..
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