The year 2016 was filled with interesting twists and turns on the world stage that greatly affected the financial markets. There was the United Kingdom’s vote to leave the European Union, also known as Brexit. As a result, Scotland began the push for another referendum to leave the United Kingdom, which is still in process.
European countries such as of France, Germany, and the Netherlands witnessed a continuation of the migrant crisis from Northern Africa and the Middle East. Each of these countries has seen a recent rise in opposition parties to challenge the status quo. In 2017 all three will also elect new leaders. Setting the stage for uncertainty, both politically and financially, across Europe in 2017.
In 2016 South Korea unceremoniously dismissed its long-standing prime minister, Hwang Kyo-ahn. Then, to the surprise of many, including American pollsters, 2016 saw the election of Donald Trump as President of the United States. An event that initially threw markets into turmoil, and almost as quickly into an upward spin . Now, it is a presidency poised to throw curves at the financial market all year long.
Where Does This Leave Us?
These events, especially in the aggregate, mean 2017 is not an average year for market predictions. More than ever before, what happens politically and socially around the world is certain to affect what happens on Wall Street. There is much investors and the average Joe do not know about Trump’s intended policies, the stability of the European Union, and where the Middle East will settle when 2018 rolls around.
That being said, investors are incredibly optimistic going into 2017. The market experts have found a few solid bets for the New Year, and Wall Street experts and its biggest players have identified some of the better places to put your money. Plus, the markets have been bullish for a while now, with the DOW nearly at 20,000, and riding this high is a great time to consider where to invest your money in 2017 .
Looking Outside the United States
One of the most consistent recommendations for 2017 is to invest in emerging markets. By the end of 2016, emerging markets were up over 17%, and investors see much more room for growth in the upcoming year . There is nearly unanimous consent among experts that in 2017 emerging markets will have better risk tolerance in the upcoming year. This will lead to more capital entering and invested in these foreign countries.
Savvy investors have targets a number of markets in developing countries for growth in 2017. Take a closer look at opportunities in Brazil, South Korea, Mexico, and India. Brazil had an uptick in 2016 and more expected to come, while South Korea’s improved political situation and anti-corruption efforts mean a likely up lift for its stagnant market . Mexico and India both have economic-minded leaders at the helm and the workforce for continued growth. Other indexes recommend avoiding the bigger markets, such as Brazil and India in favor of quickly expanding economies such as the Philippines, Mexico, Columbia, and Malaysia .
The euphoria for emerging markets is not universal. Certain markets are experiencing slower growth, most noticeably China, with the country’s GDP growth expected to be 6.2% after a 6.6% increase in 2016 . As China is the largest economy among emerging markets, this does present some room for pause.
Medical Stocks on the Radar
Many of Wall Street’s stock pickers are optimistic about the U.S. market in 2017. However, with less returns expected than at the closing bell for the previous year, it is time to be smarter about some specific industries.
It would seem a risky year for healthcare, as the Affordable Care Act is on the proverbial chopping block and Republican lawmakers have yet announce a replacement plan. Yet, certain healthcare companies are repeatedly making the best bet lists. Envision Healthcare is one . Another medical company with 2017 potential is Medpace, a company that handles clinical trials within the biotech industry .
Donald Trump and Defense Spending
If there is one industry that received a serious boost from the election of Donald Trump it is military production and defense. There is an assumption that his campaign promises and Republican Congress will lead to an uptick in United States military spending . Therefore, Wall Street’s top stock pickers are looking at several defense contractors and military production companies to be big winners on the market in 2017.
Lockheed Martin is the contractor of choice for a number of United States fighter jets, unmanned vehicles and aircraft, and even spare parts . The diversification of its planes, parts, and services mean it is in a prime position if military rebuilding and defense spending do increase.
Another company with a plum spot among U.S. military contractors is Raytheon . From missiles to a range of electronic equipment, hardware, and systems Raytheon supplies the United States military with part of its essential arsenal.
Getting Busy with Banking
Since the market downturn in 2008 the general public with skepticism has regarded banks and financial institutions, and with good reason. There were years of government bailouts and then immense regulation of financial institutions under new federal law. However, when it comes to diversification of investment portfolios, it is difficult to imagine ignoring the potential of some banks and other financial institutions in 2017.
If you want to look towards some of the big names on Wall Street, there is no better example than Warren Buffett of Berkshire Hathaway. The financial institution he is betting on for 2017 is Bank of New York Mellon. Other investors seem to agree with the financial giant. The feeling is Bank of New York Mellon is currently trading under its value, and therefore the stock price is right to rise in the coming year .
Sometimes there is a time to buy stocks for their potential growth and rise in price into the New Year, and then there is dividend potential. One financial institution that is set to distribute a dividend back to shareholders is Prudential . The prediction is this will be a significant distribution of corporate funds to investors, and there are recommendations all over Wall Street to scoop up some stocks now.