BENGALURU/LONDON Global stock markets will rise further in 2017, hundreds of upbeat strategists say in a Reuters poll released on Wednesday, braving a long list of political uncertainties just as the fuel behind the historic post-financial crisis rally runs dry.
The most striking shift since the last Reuters global survey - in October - is how quickly many strategists, brokers and fund managers have changed their tune on the shock election of Donald Trump as the next U.S. president.
Before he was elected a month ago, a majority said his protectionist threats on the campaign trail augured for a decline in world trade and a poor economic backdrop for stock markets propped up on central bank cash.
Now, a majority of those same analysts say his plans to slash taxes for individuals and businesses, well-understood before the election, as well as infrastructure spending, ought to boost lacklustre economic growth and push shares higher.
Wall Street is already at a record high.
Many analysts who provided bullish views tempered them with concerns that much rests on hope that world economic growth will get a boost after a sluggish year, as well as widespread acceptance major central banks are at or near their policy limits.
"Against the backdrop of elevated valuations, slow growth and limited scope for credit expansion, our target and the recent rally are reliant on policymakers' ability to deliver growth next year," wrote Savita Subramanian, head of U.S. equity and quantitative strategy at BofA-ML in a client note.
"Trump's comments on trade and (Republican Party) comments on deficits and spending could drive big market swings in the coming months."
Still, views from more than 200 equity analysts and fund managers around the world were for all of the 19 indexes polled to have risen by the end of next year. A majority also said the risk to their stocks outlook is skewed more to the upside.
A stronger dollar, already at a 14-year high, driven by expectations for even higher interest rates from the Federal Reserve on Trump's tax cut plans, poses the biggest risk over the next six months to a market addicted to central bank money as well as a culture of company share buybacks.
Indeed, a separate Reuters poll this week predicted sovereign bond yields are not going to surge ahead despite the sell-off since Trump won the election, suggesting the pop in inflation and in growth is still not at hand. [US/INT]
Apart from concerns over how Trump's White House will view and interact with the world, there are plenty of political events next year that could weigh on stocks. There is also uncertainty around how Britain will manage its exit from the European Union once it triggers the formal process next year.
"The wave of anti-establishment voting poses a big threat to Europe in 2017 given the elections that will take place in Germany, France and the Netherlands, and now more than likely Italy as well," said Craig Erlam, market analyst at OANDA.
"Further disintegration in Europe could spell the beginning of the end for the euro zone project and leaders will have to work hard to ensure the year passes without any further mishaps."
UP AND UP
After a tumultuous year, European stock indexes are expected to rise steadily in 2017, but by less than what was predicted three months ago and nowhere near 2015's all-time highs. [EPOLL/FRDE] [EPOLL/GB]
The bull run since 2009 in U.S. stocks is expected to extend into 2017, provided profits pick up to prevent shares from getting too expensive. [EPOLL/US]
Emerging economies' stock markets are expected to outperform developed ones despite concerns about a coming rise in protectionism and a possible decline in world trade, and ever-stronger dollar. [EUR/POLL]
Brazil's stock index .BVSP is expected to gain almost a fifth by the end of 2017 from Tuesday's close after gaining slightly over 40 percent so far this year. That is in stark contrast to what is happening in the real economy, in deep recession and 12 million people out of work. [EPOLL/BR]
East Asian stocks are expected to have a better run next year after an uneven performance this year -- replete with risks as it remains unclear how far Trump will go to fulfill campaign promises of trade protectionism and migration curbs. [EPOLL/CN]
(Additional reporting and polling from reporters in Seoul, Shanghai, Hong Kong, Sydney, Tokyo, London, Frankfurt, Milan, Moscow, New York, Brasilia, Sao Paulo, Toronto and Bengaluru Editing by Jeremy Gaunt)