Initial market falls precede stronger returns

In 2016, we’re looking for global sharemarkets to provide stronger returns than what we saw last year. Despite the sharp falls we’ve already experienced – caused by increased China fears and ongoing US Federal Reserve rate hike concerns – we see shares trending higher due to this asset class being relatively inexpensive compared to bonds and bank deposits, and easy global monetary conditions. Interest rates are expected to remain low in 2016. Global growth is still constrained due to low inflation in the US, monetary and quantitative easing in Japan and Europe and further rate cuts in China. Australia’s economic growth will remain below potential, with the Reserve Bank cutting interest rates again as a consequence. Watch Shane Oliver's market outlook video below.