Oliver's Insights - 2011 in review: should we be concerned about 2012?
14 December 2011 - This note reviews the performance of investment markets in 2011 and takes a look at the outlook for 2012.
The key points are:
> 2011 has been a year full of disasters with floods, earthquakes, civil wars in the Middle East, and of course public debt woes in Europe and the US. Fears of another global financial crisis and global recession have resulted in a rough ride for share markets.> The shadow cast by Europe means greater uncertainty than normal. However, despite reasonable profit growth, shares have fallen suggesting they have already discounted a lot of the bad news. On top of this, everyone seems to be bearish and monetary conditions are easing further. If the European Central Bank steps up its involvement as we expect and monetary easing continues elsewhere, shares will ultimately have a much better year ahead.
> The main risk for 2012 is the potential for Europe to plunge into a deep recession. Other risks relate to a Chinese hard landing and fiscal austerity triggering weaker growth in the US.
