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Current Perspectives

Beyond the Emerging Middle Class

For many years, the rise of the middle class in emerging markets has captivated the imagination of investors. We think this is an illusion. It’s the working classes who will be the real engines of consumer growth in developing countries.

Economic Perspectives

Global Economic Outlook

GlobalForecasts for global economic growth for 2014 haven’t changed since the start of the year, even though the start was uneven and slower than expected in some areas due to bad weather. We still see global growth rising 3.1% in 2014, up from 2.4% in 2013.

US Labor Markets Show Resilience and Strength in First Quarter 2014

USAlthough the US unemployment rate has remained essentially unchanged for the past few months, further inspection of first-quarter labor market data reveals impressive gains that bode well for faster economic growth in the second quarter of 2014 and beyond.

Can Greece Exit Its Bailout?

EuropeWith a successful bond auction this week, Greece’s ambitions to exit its bailout late this year have taken an important step forward. We believe such a bailout exit is now more likely. However, with debt still at very elevated levels, many of the country’s fundamental problems remain unresolved.

Malaysia and Philippines: Dealing with Cost-Push Inflation

AsiaHeadline inflation rates in Malaysia and the Philippines have rebounded in recent months. While the rises are seen to be technical and transitory, concerns about a second-round effect and the global economic cycle are presenting a challenge to central bankers in both countries.

Australia: Changing Risks

AustralasiaEven if many of the factors behind our medium-term outlook for Australia are still intact, the balance of risks has clearly shifted, making rate cuts less likely. But expectations of an imminent rate hike are well off the mark, in our view.

Japan: Murkier Waters Ahead

JapanThe consumption tax hike on April 1 injects a large amount of uncertainty into Japan’s economic picture. It will be difficult for a while to discern the true underlying trend. Does greater uncertainty mean the Bank of Japan should be acting again?

Russia: Resilient to the Next Wave of Financial Sanctions?

EEMEAWith the US threatening sanctions against strategic sectors of the Russian economy, the likelihood of further escalation in the economic and financial war between Russia and the West has increased significantly. While Russia is in a better position to withstand an external financing stress now than in 2008, the loss of Western funding will be damaging for Russia’s economy.

Brazil: Severe Drought Adds Economic Risk

Latin AmericaThe unusually dry season has depressed water levels in Brazil’s reservoirs, and a scenario of electricity shortages later this year can’t be ruled out. If energy rationing comes, it will hurt economic activity and the fiscal bottom line—possibly leading to a credit-rating downgrade.

Challenges Ahead for Canada’s Economy

CanadaIn 2013, Canada’s economy expanded by 2.0%—better than expected and up from 1.7% in 2012. But today, growth still relies too heavily on household consumption, and we see continued headwinds that may thwart a “great rotation” toward more balanced, diversified economic growth.

Market Perspectives

Australian Value: February 2014

Global equity markets rebounded in February as investors found reasons to be optimistic despite mixed macro news. The direction of the US Federal Reserve’s policy continued to serve as a catalyst for market behavior. Fed Chair Janet Yellen reaffirmed in February that tapering of its asset purchase program will continue unabated. Investors were encouraged to hear that the program will be reduced in measured steps and that the Fed will maintain an accommodative monetary stance for the foreseeable future. Although US economic reports released during the month suggested that the world’s largest economy had hit a soft patch, investors were inclined to discount these numbers as being the result of unusually harsh winter conditions in the eastern half of the US. Instead, investors focused on strong quarterly corporate earnings reports and on merger and acquisition activity that injected liquidity into the market and suggested growing confidence among business leaders. News out of other key developed regions was also mixed. In Europe, the eurozone economy’s expansion was shown to have exceeded forecasts in the fourth quarter, largely thanks to France and Germany. However, data also indicated that consumer price inflation in the eurozone remained at a very low level in February and that the unemployment rate stayed high in January. In Japan, core consumer inflation and factory output for January hovered near multiyear highs. However, Japan’s economic growth in the fourth quarter was disappointing due to weak exports and machinery orders, and investors were concerned that a scheduled sales tax hike in April would crimp consumer demand. Preliminary data indicated that manufacturing growth in China had fallen to a seven-month low in February. This was viewed as further evidence of a slowdown in the world’s second-largest economy. Also, China’s central bank intervened in the currency markets, engineering a sharp depreciation in the renmimbi against the US dollar in order to stem speculative inflows..

In The News

Can cheap, high quality stocks still be found?

The world’s largest and best-known defensive companies may look overvalued but that doesn’t mean investors should give up on finding quality businesses with predictable earnings and capital preservation potential, according to AllianceBernstein senior portfolio manager Chris Marx.

North Asian cyclical stocks ‘unjustifiably cheap’

Cyclical companies based in North Asian economies represent the best value investment in Asia, according to AllianceBernstein’s specialist in the region Stuart Rae.

Volatility means opportunity for fixed-income investors’

Market volatility — combined with the fact that the US and Australian central banks are taking divergent paths on monetary policy — is providing new and interesting opportunities for active fixed-income managers to take advantage of movements in interest rates and currencies to generate returns for clients.

Fund manager doubts Aussie reserve status

Just as the International Monetary Fund highlights the Australian dollar’s growing position as a reserve currency, AllianceBernstein is seeing that role as under threat.

Asian bonds offer value after Fed-induced sell-off

Given Asia’s economic fundamentals, AllianceBernstein believe the spike in local bond yields presents an opportunity.

Our Approach

How we partner with you and the specialist services that we offer to help superannuation plans address the multiple challenges they face.

Learn more about our approach

Opportunities

  • Emerging Markets Multi-Asset Portfolio

    Our research indicates that an actively-managed portfolio combining equities, debt and currencies offers significant advantages over a single-asset-class approach.

  • Low Volatility

    Less volatile stocks have historically outperformed more volatile stocks over full market cycles, in part by losing less in market downturns. This defies a central tenet of modern investing theory, which holds that risk and return go hand in hand: accept more risk and you’ll be paid with higher rewards over time.

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Sydney NSW 2000

Australia

+61 (0)2 9255 1200