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60 seconds with Alex Tedder on the 2016 outlook for global equities

While the macroeconomic outlook looks uncertain for global equities, Alex Tedder finds reasons to be bullish over individual companies, particularly those that specialise in disruptive technology and provide earnings power.

01/12/2015

Alex Tedder

Alex Tedder

Head and CIO of Global and US Equities

Macro worries

Looking at the big picture perspective we're actually quite cautious. There are a number of reasons for this:

  1. Growth globally is lacklustre in all key regions, even the US, and now China is slowing quite rapidly.
  2. Interest rates are low but they are expected to rise.
  3. Equity valuations are high, relative to history, and looking ahead there is clearly scope for derating.

Looking at individual companies, however, the picture looks much better.

Below are three areas we are particularly focused on where there is scope for earnings surprise.

Disruptive technology

We see a lot of opportunity in disruptive technology.

There are new companies with new business models that are shaking up legacy businesses. They are creating very strong revenue and earnings growth, which we think will accelerate over the next 12 -months.

Innovation and pricing power

We are big believers in innovation. Companies which innovate well generate strong revenue and earnings growth for their shareholders.

Self-help

Many legacy companies struggle to generate much top line growth, but the good ones are cutting costs, focusing on the balance sheet and delivering earnings growth to shareholders through the careful management of the assets they have.

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