Global chief investment officer
ING Investment Management
The Hague, Netherlands
Assets under management: $227 billion
U.S. GDP: 1%
U.S. CPI: 1.9%
Dollar to euro: 88 cents
Yen to dollar: 128
Hot markets: Singapore, South Korea
Hot sectors: telecommunications, technology
Angelien Kemna is toasting strong equity markets in her New Year outlook.
Ms. Kemna is betting the United Kingdom and Australia will be the strongest performing economies in 2002. The United Kingdom so far has managed to withstand the depths of global recession, and its manufacturing sector is well placed to benefit from a global economic recovery, she said. The Australian dollar is looking competitive and the country's housing sector is booming, she said.
But don't expect the U.K. market to outperform the U.S. market in 2002, she warned, as the telecommunications and technology sectors will lead global stock market gains in 2002. Rather, Singapore and South Korea, with their high exposure to such stocks, should be the world's best performing stock markets in 2002.
The recovery of those sectors figures large in Ms. Kemna's forecast. "If, as we do, you expect economic growth and company earnings to pick up in 2002 then technology, media and telecommunications will be the sectors to pick up first." She believes the general scarcity of technology stocks outside the U.S. market will give this sector an added premium internationally.
She also is hoping the banking sector will perform well, as much of the industry was looking cheap by the end of 2001.
Telecommunications and tech exposure also will drive gains in emerging markets, and she expects Mexico and India to be top performers.
Mexico will perform well on the back of a U.S. recovery, and India's large technology and software industry should trigger strong performance on the local stock market.
In the United States, Ms. Kemna expects economic recovery to become evident around the second and third quarters of 2002 as the effects of substantial interest rate cuts in 2001 trickle into the market. She expects the first green shoots of economic growth to become visible late into the second quarter, boosted by an improvement in consumer sentiment as the war in Afghanistan comes to an end. The lower oil price and low inventory levels should keep a lid on inflation.
She is bullish on U.S equities as corporate restructuring has been fierce and considerable upside is evident in equity valuations, she said. In addition to telecom and tech stocks, growth stocks will be back in favor for 2002.