Traders will never forget 2016. We went through an Asian crisis, Brexit, Donald Trump and an Italian referendum. Yet at the end of it all, the FTSE 100 still managed to close the year 15% 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 UK top picks for 2017. For more information on these stocks contact your adviser at Calamatta Cuschieri.
Diageo (ticker: DGE, dividend yield 2.7%)
Diageo plc produces, distills, and markets alcoholic beverages. The Company offers a wide range of branded beverages, including vodkas, whiskeys, tequilas, gins, and beer.
BP (ticker: BP/, dividend yield 7%)
BP p.l.c is an oil and petrochemicals company. The Company explores for and produces oil and natural gas, refines, markets, and supplies petroleum products, generates solar energy, and manufactures and markets chemicals. BP's chemicals include terephthalic acid, acetic acid, acrylonitrile, ethylene and polyethylene.
Royal Dutch Shell (RDSA, dividend yield 6.6%)
Royal Dutch Shell PLC, through subsidiaries, explores for, produces, and refines petroleum. The Company produces fuels, chemicals, and lubricants. Shell owns and operates gasoline filling stations worldwide.
AstraZenica (ticker: AZN, dividend yield 4.8%)
AstraZeneca PLC is a holding company. The Company, through its subsidiaries, researches, manufactures, and sells pharmaceutical and medical products. AstraZeneca focuses its operations on eight therapeutic areas gastrointestinal, oncology, cardiovascular, respiratory, central nervous system, pain control, anaesthesia, and Infection.
BAE Systems (ticker: BA/, dividend yield 3.5% )
BAE Systems plc develops, delivers, and supports advanced defense and aerospace systems. The Group manufactures military aircraft, surface ships, submarines, radar, avionics, communications, electronics, and guided weapon systems. BAE Systems services clients located throughout the world.
Disclaimer: 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.