AES International presents 2014 Investment Review
2014 has been a tricky year for investors.
Financial recovery continues to be Central Bank-led, whilst economic fundamentals lag behind, but slowly begin to improve.
The picture is complicated, with Europe and Japan in particular facing sizeable problems, and we all remain hopeful that significant Central Bank intervention will help resolve, not exacerbate, the issues being faced.
Whilst sentiment is positive about equity prospects (for lack of other options), many expected a deeper and longer correction in markets this year.
Equity-based returns were largely predicted correctly, but bond markets have been the real surprise.
Rising interest rates and the Great Rotation were both widely expected, but neither materialised, and we find ourselves with even lower bond yields than 12 months ago.
Tricky indeed, and as we eagerly await the final market movements of 2014, on the face of things 2015 promises more of the same.
Q1 Ups:
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S&P 500 hit a series of record closing highs
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Italian change of government positive for markets
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European equities supported by macroeconomic data
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Global equities had narrow gains
Q1 Downs:
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QE tapering concerns and the Ukraine crisis weighing on equities
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US data weakness blamed on severe winter weather
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UK equities fell as earnings disappointing
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Weak data from China and continued tensions between Ukraine and Russia.
Q2 Ups:
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Eurozone equities supported by the ECB measures
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GEM gains led by India following election
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S&P 500 up on encouraging GDP data
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UK equities edged higher
Q2 Downs:
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Markets unsettled by talk of UK interest rate rise
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Escalation of conflict in Iraq pushed oil prices higher
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Mixed Japanese data and increase in consumption tax
Q3 Ups:
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M&A activity lifted equities
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S&P 500 up with Q2 GDP growth revised upwards
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Japan up on corporate earnings and weaker yen
Q3 Downs:
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Global equities negative in US dollar terms
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GEMs lagged, Brazilian and Russian in particular
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ISIS, the Ukraine, Russian sanctions, Portuguese Bank concerns
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Faltering growth data from Europe and China, European equities down
Q4 Ups:
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ECB began expansionary measures
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Japan QE extended
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Santa rally expected
Q4 Downs:
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Oil price war sent prices plummeting
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Japan entered recessionary phase
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European data negative
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Sharp equity falls
