Will 2016 be a happy new year for investors?

No bull market can last forever. The US equity surge is now in its seventh year, making it the longest bull run since World War II uninterrupted by a fall of more than 20 percent. Fears mounted through 2015 that the post-crisis upswing in risk assets is finally running out of steam. Confidence was shaken in August and September by worries over China's growth, despite the fact that, at least according to official data, growth is meeting expectations.

With that in mind, we see six key questions for investors in 2016:

Did 2015 mark the peak for risky assets?
Can China control its slowdown?
Are we close to the bottom of the downturn in emerging markets and commodity prices?
If so, is 2016 the year inflation returns?
How will central banks respond?
How will the type of political volatility witnessed this year affect financial markets in 2016?

In answer to the first question, we expect equities to rise around 7 percent in 2016, supported by a moderate acceleration in global growth, rising earnings, healthy corporate balance sheets, and continued central bank stimulus. A strengthening U.S. dollar and falling oil prices are less likely to drag on U.S. earnings in 2016. The MSCI All-Country World Index is priced at only a slightly above-average multiple of past earnings, far short of the levels usually associated with a valuation-driven sellof