UBS has forecast, in its 2015 market outlook, that global equities will make “solid gains” in 2015 as the S&P500 expected to make a “capital gain of seven per cent”.
“Sluggish global growth has been the key headwind for stocks in 2014, particularly outside of the reasonably [performing] US economy,” a statement from UBS said.
“The UBS view is for global growth to do marginally better in 2015 after the disappointment of 2014 but [to] remain reasonably constrained,” UBS said.
“The backdrop of low interest rates, significantly lower commodity prices, diminishing fiscal drag and weaker currencies in the laggard regions should help spur some modest improvement in global growth,” it said.
The investment bank also pointed out since early September when the Australian equities market reached its high, Australia has “underperformed global equities considerably”.
“Resources have been the key drag, having fallen 17 per cent since early September,” UBS said.
“Apart from the intensifying weakness in the iron ore price, other issues weighing on the local market [include] bank regulatory concerns [and the] weak Australian dollar,” it said.
“[Although] we expect Australian equities to recover from their recent swoon and push higher in 2015 with a December year-end price target for the ASX200 index set at 5,700 [from its current position of 5,270,]” UBS said.
