EM equities supported as business cycle normalises

SINGAPORE (Feb 12): It appears increasingly obvious that the traditional business cycle is returning after more than a decade of quantitative easing across developed markets, says Neo Teng Hwee, chief investment officer and head of investment products and solutions at UOB Private Bank. The business cycle — that is, the ebb and flow of economic growth that occurs over time — was disrupted by the global financial crisis, and then the QE years as central banks experimented with ways to propel economies out of recession. This expansion which started in 2009, will be the longest on record if it continues to 2019, Neo says.

Last year was the first time in a long while that economists started the year on a sombre note and revised growth upwards continually. “For the last couple of years, we started the year fairly positive and growth was revised downwards through the year; 2017 was quite an exception. Growth got revised higher,” Neo points out.

What is the outlook for companies and equity markets now that the traditional business cycle is upon us?

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