January 2015 Quarterly Strategic Outlook

• Low inflation to dominate 2015 global landscape as growth diverges
• Oil presents upside risk for growth but Japan, Europe and China still on watch
• Bonds and their substitutes show surprising strength in 2014; expect modest reversal
• Emerging market valuation discount not as large on second look
• Kiwi needs to adjust further against USD to offset weaker EUR and JPY
• Global commodity price correction now overdone?

The December quarter and year was a rewarding one for diversified fund investors. Fixed interest produced healthy returns on the back of some softer global activity data, increased asset purchases from the Bank of Japan, a sharp decline in oil prices and associated lower inflation expectations.

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