After an impressive first half, the current bull run in stock markets is likely to continue for the second half of 2021 – but there are also headwinds on the horizon, says the CEO of one of the world’s largest independent financial advisory and fintech organisations.
The bullish message from Nigel Green, the chief executive and founder of deVere Group which has $12bn under advisement, comes as analysts watch to see if the MSCI AC World Index’s gains of around 12% hold through 30 June, they would be beaten only by a 15% rise in 2019.
Mr Green says: “Global stocks are headed for their second-best performance since 1998 for the first half of this year.
“After a highly impressive run in the first half of 2021 and the second quarter, what happens next? Will it continue?”
He continues: “Yes, the current bull run in stock markets will continue for the second half of 2021.
“The continuing robust economic growth in major economies, strong corporate earnings, ultra-low interest rates, and a sleeping bond market, will all mean that investors looking for yield will keep piling into equities, topping up their portfolios to build wealth.
“There’s more than a hint of Goldilocks in the near-term.”
But the upbeat sentiment gripping global stock markets also needs to remain in-check as headwinds loom on the horizon.
“Investors must avoid complacency in the second half 2021. There are two key things they should watch out for.
“First are changes to policies as central banks and governments look to scale back their unprecedented support, which has helped bolster asset prices.
“Second is inflation. It remains too early to say either way whether inflation is transient or persistent. But the debate will stir-up volatility which will define the second half of 2021 in global financial markets.
“Of course, if we get more sustained inflation, central banks will have to start moving sooner rather than later on interest rates.”
Mr Green concludes: “The factors that have driven the first half of the year will continue – and some may develop even further – in the second half, meaning the bullish sentiment will maintain its grip over stock markets.
“Whether the second half performs quite as brilliantly as the first is unsure, but the opportunities for strong returns for investors remain.”