UK - Pension schemes can look forward to a boost in overseas equity markets over the coming months due to global interest rate rises.
Investment strategists say expectations of more aggressive interest rate rises than previously expected and a sustained growth in global earnings will provide a favourable outlook for the stock market.
This should be welcome news for many FTSE100 schemes, which still invest mainly in equities and are struggling under a combined £100bn deficit according to figures from the Confederation of British Industry.
Standard Life Investments global investment strategist Richard Batty said despite fears of global inflationary pressures, equities were set to outperform bonds.
He said: “We feel that this is simply the end of an elongated early phase of the growth cycle beset by the fear of deflation and the start of another, slightly lower, growth phase.
“This new phase will have higher but still low inflation. Evidence from the last five US interest rate cycles suggests that during the early stage of periods of rising interest rates, equities should go through a modest consolidation phase, but outperform government fixed-coupon bonds.”
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