Resurgence of the US economy, innovation, and rising levels of wealth in emerging markets, are reshaping financial markets globally as well as altering how, when and where individuals or institutions invest, according to a new report by Bank of America (BofA) Merrill Lynch Global Research and US Trust.
According to the new Merrill Lynch-US Trust report titled ‘A Transforming World’, several advancements such as the rapidly growing oil and gas extractive technologies that lower costs for consumers and drive the US towards energy independence, and technology developments such as 3-D printing, factory robotics, Big Data, personalised medicine are changing investor behavior alongside leading to a US economy boom.
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The report reveals that stocks have begun a shift towards a secular bull market with the flow of investments from fixed income into equities.
Another key factor for change is that the engine of global growth is shifting from the US consumer to the newly affluent middle classes in China and other emerging markets, which is expected to double the number of middle-class households globally in coming years.
Bank of America CEO, Brian Moynihan, said: "It is clear from the way that financial markets and economies are linked that investors have to consider both opportunities and risks."
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By GlobalDataUS economy resurgence
According to the research, US citizens and corporations will still receive more patents because US invests more in R&D than any other country.
Merrill Lynch chief investment officer of portfolio strategy, Mary Ann Bartels, said: "Today, investors increasingly are seeking growth, and that’s reflected in the flows back into the equity markets. In a sense, the ‘new normal’ is really the ‘old normal.’"
A recent study conducted by US Trust also revealed that American millionaires have reversed their priorities in the past year to focus on making money rather than preserving it as they wait to move their cash into stocks. According to the report, 60% of the high net worth investors surveyed said asset growth is a higher priority than asset preservation.
Emerging markets growth
The Merrill Lynch-US Trust report says, the world economy is rebalancing due to the demographics and global power and wealth shifting.
Most of the growth coming in today’s emerging markets is from the middle class, which will likely double to 2 billion by 2030.
Merrill Lynch Private Banking and Investment Group chief investment officer, Chris Wolfe said: "In this transforming world, the US consumer will no longer be the chief driver of economic growth. Growth opportunities are likely to be more global. Consumers in China, Russia and elsewhere already are buying property, goods and services in North America and Europe, generating growth."
