Strong rental growth is a continuing success story

Date: 14 Jan 2016

Bumblebee Design

Alan Higgins, CIO of Coutts, says global banks have undergone a transformation and look like an attractive investment in 2016.

What will this year be like for private equities?

Globally speaking, there’s upside for European equities after the past year’s wobbles. In the UK, investors have shied away from the global exposure of the UK’s biggest companies, but we think bigger is better for UK companies in 2016.

What will Asian markets look like?

In Japan, we see improvements in the corporate culture, a benign outlook for the domestic and global economies, and attractive valuations. China has hit some bumps and the fast-paced economy will inevitably continue to slow, but equity investors should enjoy a smoother ride next year.

Will banks and bonds be a good investment this year?
Global banks have undergone a transformation and profitability is improving. They look like an attractive investment. As for the alternative to low returns, we see opportunities in several trading strategies which can cushion portfolios when equities are falling, but have the potential to provide returns to low-yielding bonds. We also expect corporate bond investors getting paid well for the low risk of default.

What will this year look like for UK commercial property?

After a strong run over several years, commercial property yields have been driven down but they still offer an attractive premium over bonds and we see strong rental growth supporting capital values.