Why investors should be optimistic about 2013

Last year was a hard one for investors.

Markets were faced with many unknowns such as the ongoing struggles for financial stability in Europe, the verdict on whether China could continue its strong pace of growth while its trading partners struggled, the impact of the U.S. election, and the potential fall-out from the “fiscal cliff,” says Richardson GMP.

Read: Richardson GMP scores fiduciary excellence

With 2012 behind us, here are some reasons investors can be optimistic this year.

• A belief the worst is behind the U.S., largely due to job creation and an expectation that the U.S. housing market is on the rise—both helping to increase consumer confidence.

Read: U.S. housing surge will help Canada

• While the Canadian economy remains stable with low interest rates and a declining deficit, 2013 is expected to maintain the status quo with the greatest risk to the economy being rising consumer debt levels despite the continuing attractiveness of the Canadian dollar.

• The outlook for oil prices in 2013 is neutral to positive.

• While not to the levels seen in previous runs, base metals such as copper, nickel and zinc are expected to generate positive returns, with expectations for gold being more neutral in the longer term.

• North American stocks are poised to provide another year of positive performance in 2013 with the U.S. expected to set the pace and returns from Canadian stocks, while positive, likely to follow behind.

Read: Don’t be afraid of equities

• Earnings growth will remain subdued in 2013, but should remain positive, with current market multiples already appearing to reflect these lowered expectations.

• Trade-dependent Asian markets should get a lift from a rebound in Chinese economic growth given recent signs of improvement and the new Politburo’s commitment to both monetary and fiscal stimulus in an effort to revive the world’s second largest economy.

Read: China is still investment-worthy

• Dividend-paying characteristics of many larger corporations remain sound and will likely provide investors some buffer to continuing market volatility.

• The current fixed income recommendation is decidedly overweight corporate bonds versus government bonds with a shorter maturity over longer dated issues.

• Information Technology and Industrials are favoured for their earnings stability and their cash flow generation capabilities.

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