Capital Group looks through regions for 2016

Capital Group’s portfolio managers share their outlook for 2016 in the US, China, Europe and Japan

US

The brightest spot in the global economy. With American consumers flexing their muscles again, the US economy is experiencing moderate growth. Companies across a wide variety of industries are exposed to this rising consumption.

These include home improvement retailers such as The Home Depot and internet retailers like Amazon. As American consumers flex their muscles, select businesses in these areas stand to benefit.

Claudia Huntington, portfolio manager comments: “On a fundamental basis, the US has not reached a point of excess and is in pretty good shape. However, investors should expect some volatility going forward. Right now the biggest concern is whether China will get worse. There is always something to worry about. A whiff can turn into a cough, but in this case I do not expect a cold.”

China

China has transitioned away from an investment-led economy towards an economic structure more reliant on consumption is well under way. But the consumer economy is not immune to broader weakness. Slower growth overall may act as a headwind for consumption.

That said, leading firms can continue to distinguish themselves. For investors, being selective is the key. Sports and fashion wear, travel and tourism, insurance and pharmaceuticals are some of the main areas where market leaders may continue to see solid sales growth over time.

Galen Hoskin, portfolio manager comments: “The nature of Chinese growth is changing, with consumer demand playing a greater role. E-commerce, healthcare, insurance and air travel are just some of the industries where there are high-quality local firms and multi-nationals that appear well-positioned to prosper as China’s economy makes this difficult transition.

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