In a chat with the ET Wealth, John Praveen, MD and Chief Investment Strategist, Pramerica International Investments talks about the investment opportunities in the present global scenario.
Where do you see global investments flowing in 2017?
We are very positive on the US and believe that a lot of money may move into the US equity market. We are also positive on emerging markets on the whole and, within emerging markets, very positive on Latin America. We are also bullish on countries like India, Taiwan, etc. from Asia.
The US equity market is already at an all-time high. What drivers will fuel a further rally there?
The equity market rally will continue in the US because of the policy initiatives by President Trump. They will give a new lease of life to the US economy and to the market. Trump’s win is a game-changer for the US markets and the US economy.
While the expected corporate tax cut will increase corporate profits and boost capital spending, cut in personal tax will lead to increased consumer spending. Reduced regulations, especially in sectors like oil and gas, financial services, etc. will reduce the cost of doing business.
Increased government spending, especially on infrastructure and defence, will also help the economy. The US GDP growth, which is around 2% now, may move up to 3% by the end of 2017 and further in the coming years.
The US corporate earnings were also weak for the last several years due to factors like weak commodity prices, weak financial earnings, etc. Earnings growth in the US was just 1% in 2016, it should reach double digit growth in the coming years.