LATEST NEWS

NOMURA: It's The End Of The End Of The World

AP Photo/Ben Berry

Japanese investment bank Nomura is out with a big global economic outlook for 2014.  The title is "The End Of The End Of The World." The theme is that as 2013 comes to a close, the age of crisis is well and truly over. There are still lingering issues of course, but the really huge themes that have dominated the past several years are gone, and concerns over systemic risk will no longer be high on investors minds.

Strategist Michael Kurtz and Co. write:

There wasn’t any memo, but FYI the Global Financial Crisis is over. Not that clocks have simply rewound to 2006, but: the US property market has been recovering for no less than 20 months, the US household balance sheet is largely repaired, the renminbi is stronger and the US-China current account imbalance vastly reduced, China is grasping the nettle of structural reform, European core-vs-periphery cost differentials have substantially narrowed, and Europe is growing again.

Looking forward, we thus see 2014 as a year in which macrosystemic risks will not dominate equity performance – unfinished QE ‘taper’ business notwithstanding – but equally as a result, a year in which returns will not be spirited along by ‘risk compression’ and multiple expansion either. Rather, global stocks in 2014 will stand or fall in large part simply on whether they deliver earnings. The good news is, 2014 should serve up a reasonably robust growth platform for global corporate earnings: Our economists expect global nominal GDP growth to rise to 7.0% next year from 2013’s 6.1% -- leaving our strategy preferences inclined toward cyclical- and reflation-sensitive sectors. But the acceleration will be unevenly skewed toward the Developed Market economies, while Emerging Market growth plateaus and China’s growth further moderates (to 6.9% in real terms).

For investors, this is a double-edged sword.

Screen Shot 2013 11 27 at 5.45.33 AM

Nomura

The big call.

No longer will markets be able to make gains just by wringing out lingering fears of collapse. Markets are going to need actual growth.

They write:

Looking toward 2014, we believe much of the ‘deep value’ argument for stocks has now played out as the Global Equity Risk Premium has fallen to just 0.4 standard deviations currently vs. its late-2011 high of 2.2 standard deviations. With this, global equities have outperformed the aggregate global bond index since mid-2012 by a sizeable 45% over the same time period.

From here, equities will increasingly require more of a growth rationale for upside, rather than the macro-risk compression of 2012-13. The fact is, after fairly undramatic passages (by 2010-12 standards) of such episodes this year as the Cyprus banking failure and October’s US fiscal standoff, very few developments from here are likely to rise to the level of true systemic contagion threats. But this also begs the question where the superlative earnings growth will be found.

So where will that growth be found? Nomura's strategists are particularly bullish on Japan and Europe.

Conversely, they're concerned that the US will see margin compression (due to mean reversion) and like many others they're not particularly optimistic about emerging markets. As for sectors, they like tech, industrials, consumer discretionary stocks, and financials.

Again though, the big picture is that the days when stocks would rise just thanks to systemic fears dissipating is over. Now the hunt is on for real growth.



More From Business Insider

--

Get stories like this on the Yahoo app and discover more every day.
Download it now.
  • Mistry replies on Tata Sons' 'counter-allegations' IANS - 6 hours ago

    The replies came through an affidavit which was filed by Mistry's investment companies to the NCLT's Mumbai bench. The rejoinder comes after Tata Sons had filed an over 200-page affidavit with the NCLT earlier in January, rebutting charges levelled … More »

  • Software to comply with Indian labour laws unveiled IANS - 6 hours ago

    "The SaaS-based plug-and-play tool gives free access to 40,000 pages of the Indian labour laws for compliance management by enterprises, factories, shops and businesses in the country," said Simpliance Founder Anil D'Souza. "Labour law compliance … More »

  • 50% of BSE IPO subscribed on 1st day of offering IANS - 8 hours ago

    Mumbai, Jan 23 (IANS) Stock exchange major BSE's initial public offering (IPO) was subscribed by 50 per cent on the first day of the Rs 1,243.43 offering which started on Monday. According to the data ... … More »

  • Note ban boosts deposits, lowers bank loan growth: Report IANS - 8 hours ago

    New Delhi, Jan 23 (IANS) The recent demonetisation in India led to an immediate jump in current account and savings account (CASA) deposits, incremental lending saw a massive drop, while digital banking witnessed a major surge, a report said on … More »

  • Okinawa Autotech launches e-scooter Ridge IANS - 8 hours ago

    New Delhi, Jan 23 (IANS) Electric two-wheeler manufacturer Okinawa Scooters on Monday launched its first offering in the Indian market an e-scooter -- Ridge -- priced at Rs 43,702 (Ex-showroom, Delhi). ... … More »

  • Differential impact of demonetisation across ABS transactions: Ind-Ra IANS - 8 hours ago

    Mumbai, Jan 23 (IANS) Credit ratings agency India Ratings and Research (Ind-Ra) on Monday said it has observed differential impact of demonetisation across asset-backed securities (ABS) transactions. According to the agency's report -- Indian ABS … More »

  • India against EU, Canada-proposed dispute settlement at WTO IANS - 9 hours ago

    New Delhi, Jan 23 (IANS) India has opposed an informal proposal by the EU and Canada for a global investment pact with an investor-to-state dispute settlement (ISDS) mechanism at the WTO by which corporates can take governments to international … More »

  • EIH's Q3 net profit up 8.29% IANS - 9 hours ago

    Mumbai, Jan 23 (IANS) Hospitality major EIH on Monday reported a rise of 8.29 per cent in its stand alone net profit for the third quarter (Q3) of 2016-17. The company which was formerly known as the 'East ... … More »

  • Asian Paints net profit up, hit by demonetisation IANS - 9 hours ago

    Mumbai, Jan 23 (IANS) Paints major Asian Paints on Monday posted a marginal 1.5 per cent rise in consolidated net profit to Rs 489.31 crore in the quarter ended December 31, as compared to Rs 482.02 crore ... … More »

  • SBI calls for raising income tax exemption limits IANS - 10 hours ago

    Mumbai, Jan 23 (IANS) Presenting an agenda for the forthcoming Union Budget at a time when banks are flush with funds post-demonetisation, state-run SBI on Monday called for raising various income tax ... … More »

  • Bharti Infratel's Q3 net up 25% IANS - 11 hours ago

    New Delhi, Jan 23 (IANS) Telecom tower infrastructure services provider Bharti Infratel's consolidated net profit went up 25 per cent in the third quarter of 2016-17, the company said on Monday. The company posted a net profit of Rs 620 crore for … More »

  • Budgetary expectations lift Indian equities IANS - 11 hours ago

    Mumbai, Jan 23 (IANS) Hopes of budgetary incentives and healthy buying in metal, automobile and oil and gas sectors lifted the Indian equities markets on Monday. However, profit booking at higher levels ... … More »

  • FRBM Committee submits report on fiscal consolidation roadmap IANS - 11 hours ago

    New Delhi, Jan 23 (IANS) The Fiscal Responsibility and Budget Management (FRBM) Committee, headed by former Revenue and Expenditure Secretary N.K. Singh, submitted its report to Finance Minister Arun Jaitley on Monday with recommendations on the … More »

  • NEXTracker, CleanMax Solar to set up tracker system in Chennai IANS - 12 hours ago

    New Delhi, Jan 23 (IANS) American solar solutions provider NEXTracker announced on Monday that it is partnering with India's CleanMax Solar to supply a 30 MW solar tracker system to a project in Tamil Nadu. "NEXTracker has partnered with CleanMax … More »

  • HUL's net profit up 7% in Q3 IANS - 12 hours ago

    Mumbai, Jan 23 (IANS) FMCG major Hindustan Unilever on Monday reported a seven per cent increase in its net profit to Rs 1,037.93 crore in the quarter ended December 31, 2016 as compared to Rs 971.66 crore in the corresponding quarter last fiscal … More »

  • Strong rupee, budgetary expectations lift equities IANS - 14 hours ago

    Mumbai, Jan 23 (IANS) Rupee appreciation, coupled with hopes of positive incentives in the upcoming Union Budget and broadly positive Asian indices, lifted the Indian equities markets on Monday. The key ... … More »

  • Global semiconductor revenue to grow 7.2% in 2017: Gartner IANS - 15 hours ago

    Mumbai, Jan 23 (IANS) Worldwide semiconductor revenue is set to hit $364.1 billion in 2017, an increase of 7.2 per cent from 2016, representing a turnaround for the industry as it experienced 1.5 per cent growth in 2016, market research firm Gartner … More »

  • itel unveils 4G VoLTE-enabled smartphone at Rs 7,550 IANS - 15 hours ago

    New Delhi, Jan 23 (IANS) itel Mobile, part of Chinese mobile manufacturer Transsion Holdings, on Monday launched a new it1518 4G VoLTE-enabled smartphone at Rs 7,550. The 5-inch device houses 8MP rear ... … More »

  • Indian equities buoy on strong rupee, budgetary expectations IANS - 16 hours ago

    Mumbai, Jan 23 (IANS) Indian equities markets traded on a flat-to-positive note during the mid-afternoon trade session on Monday, as rupee appreciation, coupled with hopes of positive incentives in the ... … More »

  • Amazon India to empower Naga women entrepreneurs IANS - 16 hours ago

    Bengaluru, Jan 23 (IANS) With a view to drive digital literacy among women entrepreneurs in Nagaland, Amazon India on Monday partnered with the state government and the National Skill Development Corp (NSDC) to provide them a global platform to sell … More »

  • 5 reasons you should bother about Budget 2017 Simplus Information Services - 18 hours ago

    The government reveals the income and expenditure incurred in the year gone by. It is the estimate that the government makes about the income and expenditure for the year ahead. The government announced the demonetization of currency notes in … More »

  • Is digitisation the need of the hour? Simplus Information Services - 18 hours ago

    What makes digitisation or digitalisation so important? The conversion of data from analogue to digital has been going on since the 1950s. Nowadays, digital technology is helping restructure businesses, organisations, and economies. … More »

  • Coal India discontinues Forward e-auction Scheme 2007 IANS - Sun 22 Jan, 2017 7:12 PM IST

    Kolkata, Jan 22 (IANS) Following special forward e-auction for power sector and exclusive e-auction for non-power consumers being conducted in a "regular manner", Coal India Ltd (CIL) has advised its subsidiaries to stop conducting the Forward … More »

  • Kudankulam Unit 2 generates full capacity of 1,000 MW IANS - Sun 22 Jan, 2017 7:08 PM IST

    Chennai, Jan 22 (IANS) The second 1,000 MW atomic power reactor at the Kundankulam Nuclear Power Project (KNPP) in Tamil Nadu has attained its maximum capacity, the Russian builders announced on Sunday. "Kudankulam NPP Unit No 2 has for the first … More »

  • Non-life insurers' premium income grows over 25% in December IANS - Sun 22 Jan, 2017 5:04 PM IST

    Kolkata, Jan 22 (IANS) Non-life insurance companies posted over 25 per cent increase in their gross premium income (direct premium income underwritten) to Rs 9,760.23 crore in December compared to Rs 7,777.38 ... … More »

MARKET MOVERS

  • Most Actives
    Most Actives
    NamePriceChange% Chg
    17.53+0.18+1.04%
    SUZLON.BO
    330.85-4.45-1.33%
    GRUH.BO
    80.75-0.40-0.49%
    IBREALEST-.BO
    929.25+21.95+2.42%
    BAJFINANCE.BO
    181.30+9.85+5.75%
    HINDALCO.BO
  • Price % Gainers
    Price % Gainers
    NamePriceChange% Chg
    67.80+11.30+20.00%
    BELLACASA.BO
    27.00+4.50+20.00%
    ORIENTHOT.BO
    2,288.85+381.45+20.00%
    BHARATRAS.BO
    215.25+35.85+19.98%
    DHPIND.BO
    133.00+22.15+19.98%
    KATWAUD.BO
  • Price % Losers
    Price % Losers
    NamePriceChange% Chg
    39.10-4.40-10.11%
    VARDHINDQ.BO
    87.40-9.70-9.99%
    SAPL.BO
    33.45-3.70-9.96%
    ABHIINFRA.BO
    79.90-8.65-9.77%
    BINNY.BO
    20.30-2.10-9.38%
    TRENDELEC.BO
  •  
    Recent Quotes
    Symbol Price Change % ChgChart 
    Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
    You need to enable your browser cookies to view your most recent quotes.
  • Recent Quotes News

    •  
      Sign-in to view quotes in your portfolios.