Dun & Bradstreet India’s Leading BFSI Companies 2017

Global Securities Market

The global macro-economic factors play a vital role in determining the path of the securities market across all the countries. In the current extremely interconnected world, the butterfly effect is visible every day. The performances of stock markets are heavily interlinked to the performances of the listed companies and business expectations which are in turn linked to the economy. Therefore, it is vital to take look at the outlook for the major economic regions to understand and predict the performance of stock markets. The real GDP growth of the world in 2016 is estimated to be 2.3%, compared to 2.7% in 2014 and 2015 (World Bank). 2016 witnessed a series of high intensity events in different regions that had an adverse impact across the globe. Uncertainty over the health of leading European banks, low oil price, Brexit, political instability, slowdown in China, and slow pace of US recovery are some of the major events that had a negative impact on businesses. The dark shadows of the great recession in 2008 and 2009 are yet to be fully lifted and are expected to linger in 2017 as well. However, the growth in 2017 is expected to come from government programs and monetary policies aimed to increase the aggregate demand. Therefore, the performances of stock exchanges worldwide are expected to be mildly positive. USA The new administration in US is expected to usher in new changes aimed to boost the economy at the earliest. The major expected fiscal stimulus measures, reduction in tax rate, restructuring tax rate, and increase in infrastructure spending. These measures are aimed to increase the income of its citizens and incentivize American companies to manufacture locally. This development would also aid in the much needed – creation of jobs. Therefore, the outlook on US is mildly favorable. EUROZONE In June 2014, the ECB adopted negative interest rates, becoming world’s first major central bank to take such a measure. The introduction of negative interest rates is a monetary policy tool aimed increasing the aggregate demand by reducing the cost of borrowing. The continuation of this monetary policy has not yielded the desired growth expected in the region. This can be attributed to the lack of optimistic outlook held by businesses and weak consumer demand. In March 2015, the Quantitative Easing (QE) program undertaken by the ECB to increase money supply. In December 2016, the ECB announced that it would be curtail its QE post March 2017 to 60 million euros from the current 80 million euros per month till December 2017. The QE program was unsuccessful in achieving its desired growth and inflation target objectives. In addition to the unsuccessful results/less than desired results from the monetary policies undertaken by ECB, weak demand, high unemployment, and terrorism continue to plague the European region. Therefore, the region is expected to have a less favorable outlook. The outlook on major economic regions are provided below: Outlook 2017

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