Following a period of downgrades, the coming three to six-month outlook for global equities, credit and other income-generating assets looks favourable, based on stabilising global growth and significant US-dollar liquidity injections by the US Federal Reserve into the global financial system, says Standard Chartered Private Bank chief investment strategist Steve Brice .
For those who worry that the rally might be curtailed, Brice said it is worth remembering what led the world to the global financial crisis . These two policies encouraged a spiralling of debt in the US and financial imbalances that ultimately brought the US and global economy to its knees.Looking through a short-term lens, the Fed’s risk-reward profile means over-reacting to economic weakness.
Unfortunately, around the world, the reverse has happened. Global growth has slowed since the GFC, in both nominal and real terms, and has been outstripped by debt accumulation.