Research and Commentary

A Clear Perspective and Point of View

About Global Market Outlook Reports

2020 Outlook for Emerging and Frontier Markets

While the U.S. continued its decade-long run, surging ahead another +31% in 2019 to lead all major developed markets (except Switzerland, +32.5%), three emerging markets did even better last year. Taiwan gained +36% as investors reevaluated the “moat” of its market champion, …

About Global Market Outlook Reports

Our CIO, Tina Byles Williams, publishes our market outlook on a quarterly basis, based on research that examines market conditions over a three- to six-month period. These quarterly analyses serve as key inputs to our fund construction process, which incorporates strategic tilts to the market segments we believe will outperform over a six- to 12-month time frame. For global equity portfolios, these tilts incorporate regional, sector, and capitalization strata as well as investment process and style factors. For U.S. equity portfolios, tilts include sector, capitalization strata, investment process, and/or style factors.

Our objective is to construct a portfolio of “best in class” investments with weightings consistent with our overall investment strategy.

FIS Group Global Market Outlook Reports


Q1 2016 – Equities Elude The Four Horsemen…Again!

The upsurge in equity prices that started on March 10, 2009 has been among the most despised and distrusted bullmarkets of all time. For each of its seven years, newfound horror stories materialized to interrupt the bull trend with corrections roughly as large and as scary as the one which began this year. In 2009 the S&P 500, still reeling from the aftermath of the GFC, declined by 25% through March 9, 2009. In 2010, fear over the U.S. deficit set off a -15 % correction. In 2011, panic over a U.S. Treasury default sent the S&P down
-19.5%. In 2012, the euro crisis caused two corrections, -10% in the spring and then -8% in the autumn. In 2013, the panic was about Federal Reserve tapering and a U.S. government shutdown, although these only hit the S&P by -6%. In 2014, carnage in the Middle East and Ukraine catalyzed an -8% setback. And last summer, policy blunders in China caused a correction of -12%. Importantly, each of these corrections turned out to be a buying opportunity.

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Outlook For Frontier Markets

Similar to most other major global markets, 2015 was also largely a year to forget on the frontier. The few bright spots of meaningfully positive local returns (Argentina and Romania) were largely overwhelmed by further currency weakness relative to the U.S. Dollar. Looking ahead for 2016, we see a global sense of skittishness and thin growth leadership as extending to the frontier markets as well, though their lesser lack of integration and correlation with global markets will separate some markets more than others. To that end, the asset concentration within the small universe of global frontier markets managers is our top concern across frontier markets for 2016. Thus at the broadest level, we recommend underweighting global frontier markets vis a vis other clearer opportunities in Japanese equities, but see some genuine opportunities in the frontier universe relative to emerging markets. Otherwise our views here largely reflect our recommendations for medium-term allocations within the frontier universe. As in emerging markets, we expect U.S. dollar strength to continue, and indeed may even be exacerbated by local currency weakness in selected markets (e.g. Nigeria). Saudi Arabia and the rest of the GCC are making headlines for their regional confrontations, both hot and cold, fiscal struggles and influence in the oil market, but also for some peculiar reforms to the stock market. Nigeria is both cheap and expensive in different parts, and could be poised for a truly volatile 2016. Indeed much of the big African stocks seem expensive compared to their European, Asian, or Latin American counterparts, and these stocks seem poised at best for stagnation in 2016 and possibly a significant de-rating. But the universe is not without its bright spots and we see very positive macro fundamentals and micro market catalysts in Argentina, Vietnam, and Frontier Europe (ex Kazakhstan).

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2015 In Review – A Forgettable Year

For the most part, 2015 was a forgettable year as growth anemia and disappointment, enduring characteristics of the post GFC period, continued. At 3.1%, global growth once again underperformed IMF forecasts from October 2014 with most of the disappointment emanating from the Emerging world that is most exposed to the slowdown in China and the end of the commodity super-cycle. With notable exceptions of commodity producers such as Brazil and South Africa, inflation also underperformed the 2014 forecast, underpinned primarily by weak demand and the precipitous decline in commodity prices.

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Market Insights Alert

Papers: FIS Group Proprietary Research


Battening Down The Hatches Part Two

Battening Down The Hatches Part Two

View PDF version Battening Down The Hatches Part Two Part 2: How Should Investors Derisk?In Part 1 of this series, we posited that the next recession could take two possible forms:A traditional cyclical downturn as decelerating industrial production infects the...

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Will Rising Populism = Stagflation?

Will Rising Populism = Stagflation?

#derisking #asset allocation #equities #bonds #geopolitical #negative yields #yield curve # stagflation # inflation # stock and bond correlation # populism #income inequality #Brexit #Donald Trump Populism is on the rise and it has historically led to increased...

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