Apollo Multi-Asset Management is more optimistic about the global economy this year but warns of the potential for market corrections due to the uncertain outlook.
The firm holds more in emerging markets than it does in developed markets. It believes that while Europe is in crisis due to the sovereign debt problems, there are brighter spots in Asia and emerging markets. China is in rude health, in Apollo’s view, now that inflation appears to be coming under control.
But it is sitting on the fence with its view of gold, holding around 4 per cent so that it can participate if the asset rises and not hold too much if the gold price falls.
The firm also feels that there is a good chance that decoupling between indebted developed countries and some of the bigger debt-free emerging economies, which it has been predicting for a while, will occur once the growing middle classes in those emerging regions start spending on a Western scale.
Within the developed world, the US economy is expected to splutter back into life while the UK could plod along or possibly get dragged into recession if the
Fund manager Tom McGrath says: “We are confident that Europe will recover and know that markets will move to discount this well in advance of the problems actually being resolved.
“The time of maximum opportunity for long-term value investors such as ourselves is when short-term panic selling drives markets irrationally low. In certain sectors and markets around the world, we believe that has happened and value abounds.”