高盛-2019全球投资展望-2018.12-13页_3mb

2019 Investment Outlook Summary

Core Content

The 2019 Investment Outlook provides a macroeconomic and market analysis, emphasizing a pro-risk stance with a focus on equities, particularly Emerging Markets (EM), and a cautious approach to credit and interest rates. The report highlights that while the global economic cycle is aging, there are still opportunities for positive surprises, especially in EM and US small caps.

Main Views

• Equities Over Credit, Credit Over Rates: Equities are the preferred asset class due to the continued economic expansion and improving corporate fundamentals. Credit is favored over rates, as the environment is not yet signaling a significant downturn in the cycle.
• EM Over DM: EM equities and currencies are seen as more attractive compared to Developed Markets (DM), with valuations and growth prospects improving. The report suggests that EM is in the early stages of recovery, and the "EM Comeback" is expected to continue.
• Pro-Risk Stance: The report maintains a pro-risk position until clearer signs of macroeconomic deterioration emerge. It believes the current market pessimism is overdone, creating opportunities for investors.

Key Investment Implications

• Equities: Expected to perform well in 2019 due to continued expansion and earnings growth. Pricing power will be a key factor in stock selection.
• Fixed Income: A preference for high-quality, short-duration corporate bonds over government bonds. The report is bearish on front-end US rates, expecting more Fed hikes than currently priced.
• Interest Rates: The Fed is expected to raise rates three times in 2019, with the potential for either a pause or continuation of hikes. The report warns of the risks of excessive tightening or systemic financial imbalances.
• Currencies: A softening US dollar and stronger EM currencies are anticipated as global growth rebalances. EM currencies are undervalued relative to fundamentals.
• Inflation: US core inflation is expected to remain near 2%, with potential for upside surprises from tariffs or late-cycle wage dynamics. Inflation in the Euro Area is likely to remain subdued.

Macroeconomic Outlook

Growth

• Global growth is expected to continue, but the environment is shifting from divergence (US outperforming) to convergence.
• EM growth, especially outside of China, is expected to improve, supported by policy support and attractive valuations.
• China's growth is expected to slow, but not to the point of a full-blown crisis, and the policy support may lead to positive surprises.

Inflation

• US inflation is expected to remain stable, with the potential for upward surprises.
• Euro Area inflation is likely to stay low, but any upside surprise could be significant.
• UK inflation is expected to moderate toward target, assuming a stable Brexit outcome.

Monetary Policy

• The Fed is expected to continue raising rates, but at a slower pace than previously anticipated.
• The Fed may pause to assess the economic outlook, prioritizing balance sheet reduction over rate hikes.
• Central banks in the UK and Europe are expected to follow suit, while the Bank of Japan remains dovish.

Politics

• Political risks are elevated, with potential volatility from Italy's budget negotiations and ongoing trade tensions.
• The impact of Brexit is expected to be limited, with the pound serving as a shock absorber in negative scenarios.

Investment Themes

Navigating the Cycle

• The end of the cycle is likely to be reflected in markets, with increased volatility and potential for credit spread tightening.
• The report cautions against taking down risk prematurely, emphasizing the need for clearer signs of deterioration.

EM: A Drawdown, Not a Turning Point

• EM assets are expected to outperform DM in 2019 as global growth rebalances.
• Drawdowns in EM are not unusual and do not preclude long-term positive performance.
• EM currencies are undervalued, with a 12% to 23% discount relative to fundamentals.

Big Data Insights

• Big data analysis can reveal unexpected sectoral and industry linkages.
• Three key themes are identified:
  • Smart Healthcare: Healthcare companies are increasingly linked with technology and platform-based innovations.
  • Not a Drop for Free: Water usage and management are becoming a key issue for Soft Drinks and Oil & Gas industries.
  • Flying Close to the Sun: Solar and renewable energy are becoming integrated into infrastructure and airport operations.

Investment Strategy

Equities

• Selectivity is Key: With higher volatility and margin pressures, active management and stock selection are critical.
• US Small Caps: Expected to outperform due to higher domestic revenue exposure and lower sensitivity to trade tensions.
• EM Equities: Remain attractive due to improving growth and valuations, despite near-term challenges in China.

Fixed Income

• Corporate Credit: Favorable over government bonds, with a preference for high-quality, short-duration instruments.
• Rate Risk: The report is overweight spread risk and holds relative value macro views, expecting more rate hikes than currently priced.

Key Charts

• Exhibit 1: Valuations are more attractive after 2018’s broad weakness.
• Exhibit 2: Fiscal support is declining in the US, increasing in Europe and China.
• Exhibit 3: EM currencies are undervalued relative to fundamentals.
• Exhibit 4: Faster wage growth is a risk for the policy outlook.
• Exhibit 5: US profit margins tend to peak late in the economic cycle.
• Exhibit 6: Financial conditions are responding to Fed hikes.
• Exhibit 7: EM drawdowns are not unusual in longer-term bull markets.
• Exhibit 8: Big data analysis can reveal macro trends.
• Exhibit 9: Equities are supported by continued earnings growth.
• Exhibit 10: Rate hikes are expected to broaden beyond the Fed in 2019.

Conclusion

The report concludes that 2019 offers a better deal for investors, particularly in EM and US small caps. While risks are present and may rise toward the end of the year, the current macroeconomic environment suggests it is too early to position for a downturn. Investors are advised to remain selective and take advantage of episodic drawdowns as opportunities.