Globe editors have posted this research report with permission of Canaccord Genuity. This should not be construed as an endorsement of the report's recommendations. For more on The Globe's disclaimers please read here. The following is excerpted from the report:
After remaining stuck around 3 per cent for the past five years, global economic growth appears set to improve in 2017, as suggested by the OECD Leading Indicator indexes for G7 and BRIC countries. The JPMorgan Global Composite PMI and the IFO World Economic Expectations index are entering 2017 in a strong uptrend.
In fact, for the first time since 2006, the global economy could experience a late-cycle growth synchronisation between developed and emerging market economies. The IMF pegs global GDP growth at 3.4 per cent (up from 3.1) for 2017, with emerging markets expected to account for 78 per cent of world GDP growth.
Investors are reminded that global growth re-acceleration does not necessarily imply the outperformance of growth vs. value stocks. In fact, there is a negative correlation as investors pay a premium for growth only when it is scarce. When global growth accelerates, globally geared (i.e., technology and industrials) and resource sectors (energy and materials) usually lead markets. Inflation-sensitive groups, such as REITs and golds, also tend to perform relatively well.
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