With global stock markets ending the first six months of the year on a shaky footing, the second half of the year poses a number of profitable opportunities for hedge fund managers, according to a report by Lipper.
The report says the argument for a double-dip recession fails to consider that the global economy has never recovered enough from the credit crisis to justify talking about a second dip. A sluggish recovery appears to be the more realistic scenario.
According to Lipper, commodity investing will continue offering interesting arbitrage opportunities to lock in profits for both macro and managed futures managers. Stocks of Australian firms in the mining and the broader commodity sectors are expected to benefit the most from a positive investment bias.
Since global investors’ risk appetite paused recently, emerging market strategies should reinforce among investors confidence in their capacity to insulate their invested portfolios from macro disturbances in the Western economies. In Asia Pacific Lipper remains positive on Indian stock market exposure in global emerging market portfolios.
The second quarter’s earnings season may bring positive surprises. According to StarMine estimates published on 6 July for the Thomson Reuters Equity US Index, forward 12-month earnings are expected to grow about 27 per cent.
For some countries running huge fiscal imbalances, in the absence of any pre-emptive measure of debt restructuring, a debt default appears to be inevitable, potentially triggering in turn a PIIGS country domino effect.
Lipper says banking sector stocks in Europe will continue to be exposed to volatility clustering patterns, with up-and-down rollercoaster rides. Only credible stress tests appear to be instrumental to dissipate doubts about the solidity of the banking system in the Eurozone and to restore market confidence.
