Global Factor views 2019

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Macroeconomic backdrop

• We believe that global macroeconomic growth will modestly decelerate in 2019. Against that backdrop, central banks are likely to tread much more cautiously along the path of monetary policy normalisation.
• We expect corporate earnings to expand more slowly due to a combination of slowing revenues, rising tariffs, fading tax stimulus and margin pressures as labour costs rise.
• While equity market valuations look reasonable after the fall in stock prices in Q4, a more demanding picture for earnings growth is likely to limit the scope for a sentiment-driven re-rating. Within equities, we observe a higher-than-normal level of mispricing, which we believe is supportive of active management.