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James Millard, CIO, SIG

Bad news won’t halt global growth, says SIG


Recent higher oil prices and the severity of the Japanese earthquake may have dented global growth in the first quarter but it hasn’t shaken Skandia Investment Group’s confidence in recovery nor its optimism for growth in emerging market equities.

SIG Chief Investment Officer James Millard (pictured) says: “We continue to be overweight equities relative to cash and remain overweight Emerging Markets. Although the performance of Emerging Markets has been relatively poor this year, we expect Emerging Markets (and in particular China) to outperform significantly once it becomes clear that inflation has peaked and that we are near the end of the hiking cycle. We expect that to happen in 2011.”
In reporting the monthly decisions of the Skandia Global Asset Allocation Committee (GAAC) Millard said that economic data suggested that global growth had been a little weaker than had been expected in the first quarter of the year.  He suggested that some of this has been the result of the earthquake and tsunami in Japan and part the result of the rise in the oil price.
However, Millard goes on to say: “With financial conditions still very loose, we expect the global economy to perform well in the second half of the year."
SIG’s GAAC is to remain overweight global equities and it continues to prefer emerging markets (EMs) relative to developed markets (DMs). SIG’s asset allocation committee remains overweight non-government bonds relative to government bonds.
Millard believes that in China most of the economic data has suggested that the economy may have achieved a soft landing. He said that economic growth slowed in 2011Q1 relative to the previous quarter, while indicators such as the manufacturing PMI index suggested that the economy was growing at a trend like pace.

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