PensPlan Invest SGR AG: Analyse der Weltmärkte - Dezember 2009

STOCK MARKETS

As we approach the end of the year end we can observe that most stock markets have been trading sideways in Q4. From the investor’s point of view we are of course finishing a very profitable equity year and it was to be expected that people would lock in some of these nice gains. Most major markets have been climbing in double digit numbers, providing portfolios with a satisfactory comeback from the 2008 disaster. This does not change the view that future equity returns should be more modest than in previous periods, as the financial/economic crisis of 2007-08 has dramatically changed the banking system, capital flows and the degree of investment atractiveness of various regions/markets in the world.

These last few weeks of 2009 have also created some serious concerns for international investors, for example in Dubai, Greece etc. In all of these cases overleverage and overspending have brought the situation to the point of near bankruptcy. Dubai and Greece have not been the only ones in deep financial trouble, others, countries/ banks have recently seen credit downgradings or have seen their entire capital evaporated by bad loans. Therefore we can say that the events of the last few weeks have reduced the optimistic expectations that were so visible in Q3, bringing investors back to earth and forcing them to reduce risk in their portfolios.
On the economic front on the other hand the indications for 2010 became better, with the OECD for example expecting a 1.9% growth fo its 30 members. This growth of course has the now well known characteristic of being superior in developing nations versus the developed economies. A return to growth next year and hopefully also in 2011 is fragile and below trend, but could be the modest start of a new cycle. What will be missing in these two years though is a serious reduction in unemployment across these nations. Many many old-cycle jobs will unfortunately not come back.

Like other investors PensPlan has been locking in profits recently increasing liquidity in the portfolios. The view for the next few months is one of careful examination of market trends, especially in January/February in order to possibly rebuild portfolio equity weights. This means that our medium term investment view remains moderately constructive in that scenario of a return to modest economic growth in 2010-11.

RATES

For what concerns major bond markets we have continued to see relative stability and some actual strenght, especially during the flight to quality moment in the Dubai and Greek panic. As usual these events were not anticipated by most investors and the impact was felt. Our “bond” view though has to to be based on this possible amelioration of the global economy, with consequent modest expected increases in interest rates. Most central banks have already indicated that, that is what they will do in the next 24 months.

CURRENCIES

We have seen the dollar strenghten a bit recently as some international investors returned to it in view of the Dubai crisis. Of course it had been quite weak, especially against the € and a modest $ rally could have been expected.
Our medium term dollar negative view remains though for the time being.

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