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Saturday, 20.04.2024, 08:15
Rietumu Asset Management: heading into 2018 with high expectations and cool mind
“High-risk assets don’t always
mean high returns, but that was a case during the last year,” say RAM experts
in the review. Healthy synchronous economic growth in both developed and
developing countries. Earnings growth was back in Europe, while American equity
expected to show double digit earnings growth for the first time since many
years. Reluctance to react to growing geopolitical risks. In sum, investors got
excellent return with an extremely low volatility.
US equity market enjoyed
longer-ever streak of trading days without a drop not exceeding 5%, beating
previous record of 394 trading days. Information technology sector outperformed
other sectors due to high tolerance to risk from investors. It’s worth
mentioning retail sector turnaround. Almost whole year beleaguered sector faced
negative sentiment. However, positive sales during Black Friday and holiday
season turned back investors’ attention.
2017 was a year to remember
for a large overhaul of the tax system in the U.S. Any effect from the tax
reform on economic growth is uncertain. However, majority of economists agreed
that the effect would be positive in the short-term and negligible in the
long-term.
Investors completely got rid
of political noise from Europe in their calculations after Macron won the
president elections in France. As a result, Merkel’s failure to form ruling
coalition in the government of Europe’s powerhouse did nothing to shatter nice
performance of European assets. Moreover, incoming healthy macroeconomic data
boosted the euro against the dollar.
At the end of year OPEC and
Russia agreed to prolong oil production cuts in 2018. As OPEC countries plus
their non-OPEC supporters maintained compliance the market likely got closely
to the balance for the year. High market reaction to disruptions in the North
Sea and Libya served as an evidence of narrowing gap between oil supply and
demand. However, too high oil prices and growing shale oil production could
derail OPEC efforts.
“Heading into 2018, investors
have high expectations backed by strong fundamentals. Nevertheless, it is
important to remember some time-tested principles for successful long-term
investing: not to put all eggs into one basket and keep cool mind during market
ups and downs,” note RAM experts.
The review on RAM and the
current comments of the specialists can be found here.
Rietumu Asset Management (RAM) is part of Rietumu Bank, the leading private
bank in Latvia. The company provides professional asset management services.
RAM’s products and services are intended for a wide range of investors and are
designed to meet the specific demands and needs of each customer. In the
current market conditions, RAM’s specialists offer their customers the ability
to reach an effective yield to risk ratio.