Chartered financial analysts are warning that market participants will fail to see significant returns in 2015, as the global economy experiences another year of modest growth.
A new survey by the CFA Institute of its 5,259 charterholders and members estimates that the Canadian economy will expand by 1.7 per cent next year, while the world's GDP rises by a modest 2 per cent.
"Growth is expected to be muted both globally and in Canada, largely related to slow growth in Europe and moderation of growth in emerging markets, including China," said Thomas Robinson, managing director for the Americas at the CFA Institute.
Relative to their closing values on Sept. 30, respondents predicted that the S&P 500 will rise 4.8 per cent by the end of 2015, with the EuroStoxx 50 and S&P/TSX composite gaining a paltry 1.9 and 1.5 per cent, respectively. Since the end of September, the S&P 500 is up by less than 1 per cent, the European benchmark is down double digits and the S&P/TSX has declined by 8 per cent.
The resource-heavy S&P/TSX composite index has tracked emerging-market equities rather closely over the past decade. Softening growth in emerging market economies, which are both significant producers and consumers of commodities, is poised to serve as a headwind on the energy and materials sectors, the second- and third-biggest weights in the S&P/TSX composite by market capitalization.
According to 30 per cent of respondents, central bank stimulus will provide the biggest potential positive impact for equities around the world. Though the U.S. Federal Reserve has ended its quantitative easing program, its policy stance remains highly accommodative, as does that of its peers at the Bank of England, European Central Bank, and Bank of Japan. The largest risks to the performance of global capital markets in 2015 are judged to be weak growth in advanced economies and political instability.
The world's two largest economies – the United States and China – were deemed to be the two best opportunities for equity investments in the coming year, with the U.S. being the most preferred destination.
India, whose Sensex Index is on pace to have its best year since 2009, is ranked third as an investment locale.
The survey was taken from Oct. 14 to Oct. 28; more than 10 per cent of respondents were Canadian.
For more views and analysis on what to expect in 2015, go to Globe Investor's Market Outlook page.