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February 20, 2013updated 04 Apr 2017 3:27pm

Economic recovery in 2013 brings investment opportunities and risks: Mercer

According to the consultancy, Mercer, the lifting of economic gloom in 2013 has bought in opportunities for institutional investors, adding that the investors should manage the substantial risks that remain.

By Verdict Staff

Mercer says that structural changes such as urbanization and the desire for sustainable growth will provide new investment avenues, suggesting that investors with excess liquidity and with the financial elbow room to explore a number of investment avenues should seek to capitalize on their flexibility.

According to Andrew Kirton, global chief investment officer for Mercer: "Although uncertainty continues to hover over the global economy, heightened by the degree of policy experimentation, there are grounds for believing that some lifting of the gloom will occur in 2013. ‘Safe haven’ assets are still pricing in at the same subdued levels and yet the sense of crisis has abated. If the corporate and private sector state of mind shifts gear from no growth to low growth, this bodes well for the performance of risk assets such as equities, and may trigger competitive behaviour and improving economic conditions. Wage restraint, corporate restructuring and an improving credit environment in parts of the West may all also signify some revival of market spirits."

Mercer further says that while a ‘more of the same’ scenario might apply to Europe, and possibly the UK, there are indications that 2013 will see broader growth, spurred by improving economic conditions in China and the US, and activity going from strength to strength in many developing countries.

"Differentiated economic activity between countries will provide good opportunities for bond and currency managers", said Divyesh Hindocha, Global Director of Consulting in Mercer’s Investments business.

Hindocha added, "Some companies will prosper in this environment by making the right decisions and others will struggle, making for a fertile environment for active management."

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