Growth assets strong in 2016: AMP Capital

Decent global growth combined with low inflation and 'easy' monetary policy bodes well for growth assets going into the new year, according to AMP Capital.

Improved valuations, easy monetary conditions and the drying up of new issuance will contribute to the strength of stockmarkets, said AMP Capital chief economist Shane Oliver.

"However, worries about the Fed and a rising $US possibly weighing on commodity prices and emerging countries may mean that volatility will remain high," he said.

Looking ahead to 2016 more broadly, conditions are favourable for growth assets in general, Mr Oliver said, adding that global shares are likely to trend higher thanks to relatively high valuations compared to bonds.

"For shares we favour Europe (which is still unambiguously cheap and seeing continued monetary easing), Japan (which will see continued monetary easing) and China (which will also see more monetary easing) over the US," Mr Oliver said.

"Australian shares are likely to improve as the drag from slumping resources profits abates, interest rates remain low and growth rebalances away from resources," he said.

"But they will probably continue to lag global shares as the commodity price headwind remains."

Mr Oliver added: "Expect the ASX 200 to rise to around 5,700 by end of 2016."

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