skip to log on skip to main content

Gradual economic recovery looks more likely

17 April 2019

House view






We need clearer signs to be certain, but we’re forming a warmer outlook for growth assets, says ANZ's chief investment office.

Market indicators suggest support for the sharemarket rebound of 2019 is firming.

The main anchors for this view are signs that the large downgrade to earnings through 2018 is starting to stabilise – with green shoots appearing across an array of Chinese, and to a lesser extent European, indicators.

However, this more upbeat view is not shared by global sovereign markets where yields have rallied strongly and yield curves have flattened or in some cases inverted.

While ANZ’s chief investment office does not expect a spike in yields it does expect moderate upward pressure on yields in the near term as the global slowdown stabilises and likely improves.

Are we in a U-shaped recovery?

It is our opinion that this means we could be nearing the bottom of a global U-shaped recovery – where economies gradually recover and capacity constraints emerge slowly.

This is quite different from a V-shaped recovery where economies rapidly recover often resulting in central banks needing to quickly tighten policy (raise rates) as capacity constraints emerge in economies.

Supporting factors for a U-shaped recovery include:

  • neutral or modestly high (rather than very low) levels of stockpiled goods
  • US fiscal stimulus now fading while the US dollar is steady
  • the Chinese government continuing to moderately stimulate its economy
  • signs US companies have already slowed their capital expenditure
  • Japan and the euro zone’s level of potential growth being much lower than past decades
  • likely slower longer term growth in the US and Chinese economies.

A U-shaped path makes it more likely the current growth phase of the investment cycle would extend. Such a gradual rise in economic growth would mean central banks, most importantly the US Federal Reserve, would be less likely to tighten policy (raise rates) and could even stay on hold for quite a while.

Currently, we expect the Fed to hold rates until 2020 with inflation relatively subdued.

Best private bank in Australia

Find out why

ANZ investment strategy positions - April

If it becomes clear that we’re hitting the low point in global growth, and we’re in for a U-shaped recovery from then on, then we would look more favourably towards growth assets such as shares.

But for now we remain cautious. The major world sharemarkets are fairly valued and economic growth is weak. In this scenario we consider the sharemarket rally of the past few months to remain vulnerable until clear signs develop that an upgrade in companies’ earnings is under way.

So we remain ‘neutral’ on growth assets, with a slight preference for global shares over Australian shares, given risks that still surround the local unwinding of the house price and construction cycles.


Investment strategy
Asset class Preference Reasoning
Growth assets
Global equities Neutral Valuations across most markets are at fair value although the US is on the expensive side.
Australian equities Neutral We expect equities to perform well given attractive yields and rates holding steady.
Emerging markets Neutral Despite the rally, valuations remain on the cheap side of fair value.
Listed real assets1 Neutral Valuations in global listed property are now at the expensive end of fair value.
Defensive: fixed income
International Underweight Fixed income has been supported by slowing global growth and the oil price fall.
Australian Neutral Valuations are moderately expensive possibly reflecting markets shifting to a rate cut
Cash Neutral  
AUD Neutral Slow global growth and the headwinds from the housing markets are headwinds to our fair value estimate.


Equities, fixed income, cash and currency are relative to benchmark.

1. Comprises of 50/50 split between global real estate investment trusts and infrastructure securities.

As at April 2019.

Read the full Chief Investment Office House View (PDF 135kB)


Mark Rider, former Chief Investment Officer

Mark brought over 30 years of investment market experience to ANZ, having previously worked at UBS and the Reserve Bank of Australia. During his seven-year tenure at ANZ Mark was responsible for and contributed to the overarching investment philosophy, investment strategy and asset allocation of ANZ Private Banking.


To discuss what this insight could mean for you, talk to your ANZ Private Banker directly, or contact us below.

You might also like

Low inflation fuels long market rally

26 March 2019


The sharemarket rally is now 10 years old, ANZ’s chief investment office outlines what it needs to keep going or tip into a down cycle.


Read more

ANZ global market outlook 2019: a challenging year

19 February 2019


ANZ's chief investment office outlines the global outlook for 2019 as the global economy slows and the sharemarket is viewed with increasing caution.


Read more

Stronger growth is key to sustain rally

18 February 2019


ANZ’s chief investment office outlines why we’re experiencing a sharemarket rally, the risks that investors are facing, and its own asset-class positions.


Read more

Contact us

How to Become an ANZ Private Client

To find out more about how to become a Private Client, share your details here.

Request a call back


Email ANZ Private

Email us with your query and we'll reply to you directly.

Send an email

Call us

Speak to the ANZ Private team directly

1800 316 926

We're available weekdays 9:00am to 6:00pm AEST

Find an ANZ Private office

Our locations across Australia

Find an office

ANZ Private Bankers are representatives of Australia and New Zealand Banking Group Limited ABN 11 005 357 522 (ANZ), the holder of Australian Financial Services Licence number 234527. This document ("document") is distributed to you by ANZ and may not be reproduced, distributed or published by any recipient for any purpose.

The information provided is general in nature only and does not take into account your personal objectives, financial situation or needs. Please consider its appropriateness to you before making any investment decisions. It should not be relied upon as a substitute for professional advice. For any product referred to above, ANZ recommends that you read any relevant offer document or product disclosure statement and consider if the product is appropriate for you. For products issued by ANZ, these documents are available at This document is current as at the date of this publication but is subject to change. The document is provided and issued by ANZ unless another author is specified in the document, in which case it is provided and issued by that author. The views expressed are those of the authors only and do not necessarily reflect the opinions or views of ANZ, its employees or directors. Whilst care has been taken in preparing this document, ANZ and its related entities do not warrant or represent that the document is accurate or complete. To the extent permitted by law, ANZ and its related entities do not accept any responsibility or liability from the use of the information. Past performance is not indicative of future performance and any case study shown is for illustrative purposes only. Neither are a prediction of the actual outcome which will be achieved. Some of this information may have tax implications. We recommend that you seek specialist tax advice on how it may impact your tax obligations, liabilities or entitlements.