While not necessarily euphoric, the headquartered bank is striking a more positive investment tone in its outlook for what 2017 has in store.

(The general thrust of the bank's remarks seem very much on-target given the US Fed's decision on Wednesday evening to hike rates, suggesting some sort of return to "normality".)

Union Bancaire Privée foresees that 2017 could finally be the year that marks the end of a decade dominated by the economic crisis and its aftermath.

This is according to the Geneva-headquartered firm’s 2017 investment outlook. The outlook sings a more positive song than it did in its investment outlook for the third quarter (published in June), where it stated that global growth outlook was clouded by rising political uncertainties.

“Our optimistic global scenario is that 2016 will have been a transition year, and that 2017 see economies synchronise and pick up,” Michael Lok, group chief investment officer and co-chief executive of asset management, said in a note. 

“For the first time in a long time, across the major regions of the world, we’re seeing synchronised acceleration,” added Norman Villamin, chief investment officer, private banking, UBP. He spoke to journalists in London about the bank’s views.

Although gross domestic product growth figures from the euro-zone are predicted to drop from a predicted 1.6 per cent in 2016 to a predicted 1.3 per cent in 2017, the company said overall global growth will rise to 3.5 per cent in a budding recovery driven by agreements on oil production, brisker activity in emerging countries and accelerating US growth.

Villamin said controversial president-elect Donald Trump, who has called for trade restrictions against countries as China and also called for tax cuts, will not be a game changer for worldwide and US growth but rather an accelerator for an already growing economy.

“Even before Trump has come in, inflation expectations were rising, foreign inflation was rising, and has been rising for the last year, wage growth in the US in particular has been accelerating,” he said. 
 
Any positive effect Trump could have would not be solely due to his fiscal stimulus, but through the potential easing of regulatory constraints, namely the possible of a repeal or partial repeal of the Affordable Care Act as well as the prospective dismantling of the Dodd-Frank Act, Villamin continued.

Optimistic predictions for world growth in terms of GDP include:

-- Growth momentum in the US will be up from a predicted 1.7 per cent in 2016 to a predicted 2.3 per cent in 2017;
-- Brazil and Russia will effectively come out of recession, benefiting from the recovery of the commodity markets and stabilising domestic demand; and
-- China’s growth will increase from a predicted 6.6 per cent in 2016 to a predicted 6.7 per cent in 2017. This rate is attributed to the stimulus measures applied in 2016, and to reforms shifting its growth model from being centred on exports and manufacturing, to consumer and infrastructure spending.

Market predictions
While interest rates have strayed into zero or even negative territory in places such as Japan, Switzerland and the eurozone, change may be coming. 

The UK’s own outlook remains uncertain, with the bank commenting on the possibility of a slip into a technical recession until there is a clearer picture of Brexit negotiations.

China’s bond market is growing rapidly and beginning to open up, with Asian Development Bank figures in June 2016 putting the size of the local currency bond market at $6.9 trillion.

In its comments on Japan, UBP said the country’s banking sector has recovered, aided by the Bank of Japan; reforms to corporate governance of companies will, meanwhile, also boost the private sector in 2017. (The current Japanese government has brought in measures to reduce cross-shareholdings and make it easier for managers of under-performing businesses to be held to account.)

Commenting on US equities, UBP said a switch from high-quality, income-oriented strategies towards more cyclical, value-oriented strategies will help generate performance in the US in the coming year.

Within emerging markets, cheap valuations equities and bond markets are an opportunity for investors to add assets in 2017.

Inflation is set to pick up in developed countries, especially in the first quarter of 2017, whilst there will be a “marked drop” in emerging countries’ inflation.

Alternative strategies
UBP said alternative strategies and investments should remain a key portfolio component in 2017 because absolute returns can play the role of cushioning portfolios from adverse market movements, a role once played by bonds.

“The fundamental question for investors has moved on. It is no longer a matter of debating whether or not to make an allocation to alternative strategies,” the report stated.

“Instead, investors need to focus on the strategies and funds that best help achieve their risk management and diversification objectives, to decide on what is the best way to place funds in this sphere,” it added.