The chief investment officer of international equities manager Munro Partners, Nick Griffin, says 2018 will be a time of strong global economic growth not seen for some time.
“The cycle is maturing but it is not close to ending," Griffin said in a release. "Earnings growth is still strong and markets generally follow earnings growth.
“Interest rates and inflation will be the key indicator as to when the cycle will end."
What are the risks?
Triple3 Partners chief executive Simon Ho said 2018 will see a rebirth of asset volatility.
“This year will be very different from anything we have seen in the past few years. Last year was the first year in the history of US stocks where there was not a single negative return month for the S&P 500.
“With asset prices increasing, employment nets tightening, QE [quantitative easing] unwinding, the ECB [European Central Bank] slowing down and oil up to the US$60 range, we are starting to see shoots of growth and inflation may not be far behind.
“Talk of a ‘melt up’ is dominating markets.
“But investors should be cautious. We have had a spectacular global equity run - especially in US equities - and it would be prudent for investors to think about portfolio protection to insulate their portfolios in the event that something untoward happens. The probability of that has unmistakably risen,” Ho said.
What about property?
Tribeca Investment Partners portfolio manager Sean Fenton said domestically the economic picture is more subdued, particularly with the softer property market.
“There is strong evidence that the housing cycle has peaked and this is likely to be reinforced by APRA’s [Australian Prudential Regulation Authority] efforts to rein in aggressive mortgage lending.
“A heavily indebted household sector that is experiencing flat to negative real income growth, as well as dealing with higher energy and healthcare costs, and which has drawn down its savings rate, is unlikely to fill the gap in growth.
“Further downside risk to the economy may emerge if the current tightening in mortgage lending standards pushes house prices lower and generates negative equity effects,” Fenton said.