2016 was a year traders will never forget. We went through an Asian crisis, Brexit, Donald Trump and an Italian referendum. Yet at the end of it all, the Euro Stoxx 50 still managed to close the year marginally higher.

We started off 2017 on a much better note compared to 2016. It’s true that 2017 has its challenges already lined up; elections in France, Germany and Holland and the uncertainty of the UK negotiations with the EU. But can you mention a year which didn’t have its fair share of challenges? Even 2015 that started off as a great year ended up facing headwinds after Greece threatened to leave the European Union.

Looking at the bright side of things, 2017 also has its fair share of potential positive events. The US will kick off the Trump administration. A campaign that focused on ‘Making America Great Again’ through fiscal expansion, deregulation, higher interest rates, lower taxes and mending bridges with Russia. All this has led analysts to increase US growth forecasts and take recession in the US off the cards for 2017. Whereas before Trump we were seeing companies’ margins having peaked limiting further upside in equity markets.

Europe should also benefit from the positive events happening in the US. If inflation kicks in and interest rates start rising, it won’t be long before interest rates start rising in Europe, helping banks improve their margins and the Germans are all in for rising rates in Europe.

As we wait for higher rates, we are seeing an improvement in economic data and a rise in commodity prices which should support equity markets.

Bottom line, I think 2017 will be a good year for equity markets.

Below are my top picks for 2017. 

Valeo SA (ticker: FR)

Valeo SA manufactures automobile components. The company manufactures clutches, engine cooling, parts, lighting, electrical systems, windshield wipers, motors and actuators, security systems, electronics, and connective systems for automobile manufacturers and the aftermarket. Valeo's products are sold in Europe, Asia, North America, and South America.

ASML Holding N.V. (ticker: ASML)

ASML Holding N.V. develops, produces, and markets semiconductor manufacturing equipment, specifically machines for the production of chips through lithography. The company services clients worldwide.

Deutsche Post AG (ticker: DPW)

Deutsche Post AG provides mail delivery and other services to the public and businesses. The company offers domestic mail delivery, international parcel and mail delivery services, and freight delivery and logistics services.

Allianz SE (ticker: ALV)

Allianz SE, through subsidiaries, offers insurance and financial services. The company offers property and casualty, life and health, credit, motor vehicle and travel insurance, and fund management services.

LVMH Moet Hennessy Louis Vuitton SE (ticker: MC)

LVMH Moet Hennessy Louis Vuitton SE is a diversified luxury goods group. The company produces and sells wine, cognac, perfumes, cosmetics, luggage, watches and jewellery.

This article was issued by Kristian Camenzuli, Investment Manager at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is 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 Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.

 

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