Despite the fact 2015 was quite a rollercoaster ride for financial markets around the world, with stocks hitting a record high in May before dropping back down again in the summer, it looks as though the coming 12 months could bring a great deal of prosperity for those wanting to compile a pecuniary portfolio.
The same issues that affected investors last year will probably crop up again, such as China’s economy and stock market uncertainty, but this doesn’t mean to say the following financial investments will fail to yield impressive returns. In fact, these five should be robust enough to withstand the economic weather, whatever it may be.
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With spread bedding, you are effectively investing in the movement of a particular market. You don’t actually own the asset in question, but the degree in which you are right or wrong will determine the size of your profit or loss.
In its Global Outlook report released in November last year, banking giant Barclays said that the earnings growth rate for European stocks would be higher than the US, the UK, and Japan in 2016. However, investors must still be wary of strong performance from local currency in euro area equities.
“Europe’s economy remains more exposed to the weakness in emerging market demand, as reflected in poor industrial performance, particularly in Germany,” Barclays wrote. “However, this seems to be compensated by the gradual strengthening of Europe’s domestic economy, as, on balance, recent indicators suggest relative resilience to the external challenges.”
The reason why you should carefully consider this particular investment is because financials stand to benefit from strong corporate demand for acquisitions, spending, and share buybacks. There could also be increased lending activity, advisory fees, and interest income for this sector too.
UBS said: “Continued asset price volatility should drive additional interest in the space as some of the larger banks/brokers should see an increase in trading volumes, and hence commissions.”
The US dollar
When you consider the fact that the Federal Reserve looks set to lift interest rates for the first time in nearly 10 years as well as the European Central Bank’s economic stimulus extension, investing in the US dollar makes a lot of sense.
In its 2016 Global Outlook , Credit Suisse noted: “We expect the impact of monetary policy divergence between the Fed and European Central Bank to increase as 2016 starts.”
Thanks to its potential earnings growth coupled with recent mergers and acquisitions activity, the technology sector remains reasonably valued and could prove a lucrative investment in 2016 according to UBS.
“Although the sector is currently trading at 16.4 times earnings, we believe tech benefits from an attractive growth profile and substantial balance sheet flexibility that is likely to continue to be used for M&A and share buybacks,” cited the Swiss-based firm.