Societe Generale Private Banking favours developed economies in 2014

We are positive on developed market equities and generally negative on fixed income, said CIO Eric Verleyen and global strategist Xavier Denis.

Based on the theme “Green Light Ahead, Mind the Speed Limit”, Xavier Denis, global strategist at Societe Generale Private Banking, and Eric Verleyen (pictured), CIO of Societe Generale Private Banking Hambros, have presented the economic and investment outlook for 2014 and explained their strategy for clients’ investment portfolios over the year ahead.

As they argued, 2014 is likely to be a year of further economic “normalisation”, which should remain supportive for cyclical and risky assets, especially in advanced economies.

“There is better visibility, with fewer identified uncertainties: geopolitical tensions have greatly eased, eurozone sovereign stress has waned, the US fiscal dispute is over,” they said.

On the overall, Denis and Verleyen said that SG will be positive on developed markets equtites while it will remain cautious on emerging markets, although they still offer some pockets of value in their opinion.

“We still believe that some pockets of emerging markets will continue to offer value throughout 2014, but they will remain pretty related to market momentum. This is the case of South Korea and Mexico, for istance, which are strongly reliant on the success of the US recovery. The same can be said for Poland in Europe,” Denis said.

Denis also said SG was quite positve on risky asset, especially on those coming from the US market. “We are also positive about the state of the financial sector in Europe, as there has been a significant deleveraging over the last and there’s a good liquidity condition which the ECB will keep supporting over the year,” he said.

Looking at portfolio management, Verleyen said that the US remains SG and Hambro’s favourite market, as well as Germany’s technology sector in Europe. “We do  not exclude emerging markets altogether, but we’d rather select stocks from those emerging markets that have exposure to developed economies,” he added.

Talking about growth expectations, Verleyen said that SG expects the UK to grow by 2.7% over the year, more than Brazil (2.1%) and Russia (2.4%).

On the fixed income side, Denis and Verleyen said that SG was negative on bonds generally speaking, but still sees some value in sovereign peripheral debst in Europe and European high yields.

 

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