Last year saw geopolitical strain all across the globe. Events like Trump’s Election, rising tensions in the Korean Peninsula, Brexit, Nationalist movements across Europe aim towards de-globalization and affect trade. While these developments don’t favor markets, 2017 still proved to be a great year for investors. Returns across major markets were very positive with most indices breaking new highs.

Here are some influences from last year and some factors that could shape the next one.

2017

• The global economy finally emerged from its post-Global Financial Crisis (GFC) hangover. Talk of secular stagnation was overdone, slow global growth since the GFC largely reflected a typically constrained aftermath from a major financial crisis. 2017 saw all of that being undone.
• Cash & bank deposit returns to remained poor at around 2% in developed countries and 6-7% in India, which made equities the favorable choice for investment.
• Indian Markets rose in 2017 on the back of government initiatives and optimism in global markets. Neither demonetization nor the challenges in GST implementation at the initial stage could dampen the positive sentiment.
• Indian stock market was the second-best performer (28.7%) second only to Hong Kong. With Moody upgrading India for the first time since 2004, 2017 ended on a very positive note.
• Along with the Sensex, Mid & Small-cap index performed phenomenally (46.1% & 57.7% respectively) giving markets a broader growth.
• IPO market in 2017 was a big winner. 153 IPOs raised $11.6 Billion reflecting country’s economic strength, investor appetite and a positive future.

2018

Overall, we are reasonably optimistic that a positive economic backdrop could remain intact over the coming year. This year has started favorably but volatility may pick up. We can’t ignore the geopolitical threats that loom a little larger and the fact that Fund houses find it difficult to see value in Stock Prices.

• Globally, a synchronized expansion that was seen in 2017 should continue into 2018. After being primarily driven by US, China, Hong Kong & India; the expansion should broaden with greater participation from Europe & Japan.
• We believe reasonable risk-adjusted opportunities remain in all corporate sectors. Positive economic visibility has been behind equity market returns during 2017, a trend that can continue in 2018 so long as earnings growth maintains momentum.
• Indian Corporate earnings are expected to pick up in the coming quarters, backed by an improvement in capacity utilization, pick up in credit cycle and the government’s continued thrust towards growth.
• The government expects GDP to accelerate in FY19 and could be in the range between 7.0% to 7.5% YoY, thereby re-instating India as the world’s fastest-growing major economy.
• Increased government spending on rural housing and agriculture; Government’s efforts for infrastructure building and Bank Recapitalization programme, were some of the path-breaking initiatives taken in 2017 which could show positive results this year.
• The focus of the budget was to give a strong fillip to the rural economy and create more jobs through infrastructure creation apart from making a continued attempt to create some more social safety net.
• Balancing Forces on the economic front and a trend towards formalization of the economy (REAR, Aadhar NPS etc.) will further accelerate the pace of growth.

To conclude, 2018 may not be as rewarding as last year but a multitude of policies and initiatives that were taken in 2017 could prove significant and drive the Capital Markets. We can expect some consolidation across global markets at the beginning of the year. It could provide a good opportunity to place investments foreseeing another bull run in the second half of 2018.

Here are some reports identified by our research team that will give you some valuable insight into the investment scenario of the coming year :-

Client Service

Easy, enjoyable advisor relationships, reflected in our best-in-class service ratings and unrivaled client loyalty. Dedicated wealth managers who are fully responsible for your services and satisfaction – and evaluated accordingly.