Global investors piled into stocks on Trump recovery bet
Global investors' equity holdings rose to six-month highs in December on bets that US president-elect Donald Trump's promised fiscal splurge would spur higher growth and inflation, a Reuters monthly poll showed ahead of Christmas.
Mr Trump's plans to cut taxes and boost spending sent Wall Street to record highs as investors pile into everything from banks, to energy and materials and other infrastructure-related names. The last Reuters asset allocation poll of 2016 surveyed 45 fund managers and chief investment officers in mainland Europe, the United States, Britain and Japan.
It showed equity holdings at 45.3pc, the highest since June, capping an eventful year that saw a significant worldwide lurch towards populist, anti-establishment political movements but also signs of economic recovery - from the US to emerging markets.
Possibly the biggest upset was the election win for Mr Trump, whose economic and trade policies will shape next year's investment landscape.
"Trumponomics will be a key factor to watch in 2017," said Matteo Germano, global head of multi-asset investments at Pioneer Investments.
"If his proposed infrastructure spending, fiscal easing and tax reforms are effectively implemented, the US reflation stimulus will likely strengthen GDP growth, inflation and earnings growth."
While failure to deliver this may trigger volatility, investors reckon that will throw up opportunities for canny stock-pickers.
"Be ready to buy dips," said Trevor Greetham, head of multi-asset at Royal London Asset Management (RLAM). He said the surge in populism that had dominated the political and economic landscape in 2016 would continue to exert its "erratic influence" in 2017, and he expected volatility to rise generally.
"This will create good opportunities to buy stocks, but it would make sense to trim exposure when things appear too good to be true," he said.
The poll showed cash holdings dropping more than one percentage point to 5.4pc, the lowest since February, reflecting growing confidence that the Trump-led rally still had legs.
The poll was carried out immediately after the US Federal Reserve's December meeting at which it raised rates and signalled it could hike them three times in 2017, once more than previously expected. (Reuters)