What a year it has been. 2015 will be one many investors will be eager to forget and welcome in the New Year. A few positives may nonetheless be highlighted, despite being eclipsed by the energy crisis and a global economic slowdown.
For one, the long awaited interest rate hike by the Federal Reserve in the US was given the green light in December, with chief economists in the US believing the economy was on the right track, albeit at a slowing pace. The markets supported this view with the Nasdaq up 6.6 per cent Ytd and the Dow Jones and S&P Indexes closing the year relatively flat. 2016 will be a year where positive fundamentals data out of the labour market will be more than expected to support further interest rate hikes.
On the US corporate scene, Mergers and Acquisitions broke records in 2015, indicating a strong venture investment appetite, which strongly supports a recovering economy. US unemployment claims and Consumer Confidence are the last data figures expected prior to year-end and will contribute towards the pace and extent of interest rate hikes to follow.
Technological breakthroughs in 2015 continued to strive, with a global index of the auto sector up 13 per cent Ytd, following innovations to manufacture driverless cars by a number of companies. Performance in the sector remained positive despite the Volkswagen emissions scandal that made the headlines back in September.
Credit markets had a rough year many will be hoping to turn around. Many emerging market sovereign debt issues such as Venezuela’s are facing insolvency issues as a result of falling oil prices. Positives can be taken, however, out of European sovereigns as Quantitative easing measures undertaken by the ECB drove government yields lower, thus pushing prices higher. Corporate valuations also improved as credit spreads tightened over the year.
Lower interest rates had their positives throughout the year. In 2015 a lot of companies managed to refinance their debt at significantly cheaper levels as a result of lower financing costs. This brought about an extension to many corporates’ debt maturity profiles.
The COP21 summit held in Paris recently may also be seen as a positive. The supposed Climate agreement reached by numerous countries which sees emissions being curbed and strong resilience among countries, promotes the green energy sector to strive over the coming years as alternative energy sources are sought.
2016 is set to mirror the previous year, albeit skewed to the positive side of events. Investors are set to kick start their New Year hangovers with continued volatility, but that is next year’s problem, until then Happy New Year!
Disclaimer: This article was issued by Mathieu Ganado, Junior Investment Manager at Calamatta Cuschieri. For more information visit, www.cc.com.mt .The information, views and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri & Co. Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.