Please feel free to get in touch

Please see our Website Privacy Policy for information

Market View

2017: the year that global economic growth pushed aside political posturing

Perhaps the biggest surprise of 2017 was that there were very few market surprises at all. While the political environment was anything but stable, financial markets experienced sanguine conditions, allowing valuations to grind higher while volatility remained extremely low.

This is largely thanks to the acceleration of economic growth across all key global markets – especially Europe, China and, to a lesser extent, the US. Against this backdrop, nothing was able to divert equity markets from the positive growth story. Indeed, it has been 18 months since there was a 5% equity sell-off, 23 months since there was a 10% correction, and we’re now heading into our ninth year of this bull market. Leading indicators suggest this positive momentum will continue into 2018 (see page 2), with particularly strong performance predicted in Europe and emerging markets.

Europe on the march

Europe was one of 2017’s big surprises. At the start of the year, investors were nervous about the rise of populism. But as Germany, France and Belgium went to the polls, their fears proved largely unfounded, and it ended up being one of the best places to invest this year. European equities have returned 18% year to date, versus 11% returned by global equities. As the graph below shows, this outperformance has arisen since the French election in April.

US investors bank on tax cuts

In the US, the Senate has passed Donald Trump’s corporate tax cuts voting 51 to 49 to support what is the largest single change to US tax since the 1980s. It will see the corporate tax rate slashed from 35% to around 20% and Republicans hope it will support the US’ already growing economy. Companies that earn most of their revenue in the US have seen their share prices jump since the vote in anticipation that some of these cuts will filter through to shareholders. The vote is not only a victory for Trump, but may also provide an additional boost to the global economy.

China takes stock, while the UK deals with Brexit

Meanwhile, after delivering an exceptional year, the growth outlook in China has deteriorated moderately (although we still expect it to be high) and, according to the recent Budget, growth in the UK will remain subdued for at least the next couple of years until perhaps the early 2020s.

Making the most of the global opportunity

But that’s the beauty of being global investors. It comes down to trying to access the very best opportunities the world has to offer. Our positioning in Asian equities and corporate credit has allowed us to deliver a great client outcome this year, while adequately protecting them from the risks that might have been…

“As economic conditions have improved, markets have moved higher to reflect the favourable outlook. We expect this to continue, but we’re mindful that there seems to be little margin of safety in prices should conditions deteriorate, as inevitably they will – eventually.” - Philip Smeaton, Chief Investment Officer

Market confidence ends 2017 on a high



The Purchasing Managers’ Index, an indicator of the economic health of the manufacturing sector, continues to improve across key markets. Even in the UK, where Brexit has undoubtedly stifled business, manufacturing has benefited from a weak pound.

Consumer Confidence

Consumer confidence levels are at their highest since 2001. Retail sales are good – especially for online retailers.

Investors are bullish

According to a poll that measures investors’ attitude to market outlook, confidence levels have climbed back to the highs they hit a year ago.

A PDF version of Market View is available.

This article is for information purposes and should not be treated as a forecast, research or advice to buy or sell any particular investment or to adopt any investment strategy. Any views expressed above are based on information received from a variety of sources which we believe to be reliable, but are not guaranteed as to accuracy or completeness by Sanlam Private Wealth. Any expressions of opinion are subject to change without notice. Reproduction of this commentary is not allowed in whole or in part without prior written agreement from Sanlam Private Wealth. Past performance is not a reliable indicator of future results. Investing involves risk. The value of investments, and the income from them, may fall as well as rise.

Investing involves risk and the value of investments and the income from them may fall as well as rise and are not guaranteed. Investors may not get back the original amount invested.