The global economic climate can continue to improve into 2014, while the dislocations thrown up by short-term reforms and long-term trends provide a favourable environment for active stock pickers, a report said.

Sustainable yield remains our core investment approach, although more cyclical opportunities, reflecting a world of less synchronised growth, are starting to emerge, according to the latest edition of Global Outlook published by Standard Life Investments, the global investment manager.

“The big question for long-term investors is whether the recent ‘air pockets’ represent temporary turbulence associated with the transition between different phases of the return cycle or whether there is evidence of a strengthening of the structural headwinds that have hampered a rapid return to normality over the last five years.  Disentangling the cyclical from the structural has never been a straightforward task, especially after a period of such profound dislocation,” said Keith Skeoch, chief executive, Standard Life Investments.

“We believe that a return to normality remains slow because while the most powerful stimulatory effects of QE may have been felt, progress on the structural reforms required to reinforce self-sustaining growth is glacial.

“Slow progress, however, is not a threat in itself to either the relative attractiveness of equities and other risky assets or the cash flow yields that support them.  We continue to hold the view that we are in the midst of a correction in financial markets induced by interest rates backing off from their liquidity repressed lows and that those able to take a long-term view should maintain exposure to the sustainable yield available in equity and real estate,” he added. – TradeArabia News Service