Investment Outlook: New capital market conditio...

Activity is now accelerating in many parts of the world economy. While debt
problems in southern Europe and Ireland as well as tensions in the currency
market remain as negative elements, the risk of the previously much-discussed
double dip recession in the US can essentially be written off. There is a good
chance that the global economy will grow a bit faster in 2011-2012 than
forecasters believed late in the summer. In addition, the valuations of most
assets are reasonable and the potential returns are good. On the threshold of
2011, investors are thus being offered a wider range of opportunities, while
emerging markets remain attractive.

Ireland has become a major source of concern at the macroeconomic level − many
observers believe that Portugal is next in line − and people are discussing the
risk of a trade and currency war. Meanwhile we are forecasting global GDP growth
above the long-term trend. Together with continued low interest rates and
commitments from central banks to prop up weak growth in the industrialised
countries, this will create good market conditions, especially for risk assets.

"We have now had about one year of 'range trading' − risk asset markets
dominated by more or less sideways movements, including both upturns and
downturns. Thanks to an accelerating growth rate, which is now discernible, it
is time for the economic cycle to shift into third gear. Other indications of
this are the quantitative easing programmes initiated by central banks in key
OECD countries, persistent high growth and low core inflation in most emerging
market (EM) countries and prospects of continued profit improvements and
stronger balance sheets in companies worldwide. Nor should we forget that in the
OECD countries, fixed investments and capital goods purchases were postponed
during the 2008-2009 turbulence. So now it is time for many companies and
households to replace old machine tools, cars, refrigerators and washing
machines," says Lars Gunnar Aspman, Global Head of Macro Strategy at Private
Banking.

As financial market prospects become brighter, risk appetite is increasing among
investors. Although the aftermath of the financial crisis is still highly
obvious to many people in North America and parts of Europe, other parts of the
economic and financial world are healthy. The EM sphere lit up the macro
darkness during the financial and economic crisis. The EM countries are
continuing to shine, for example in terms of high demand − something that many
Swedish companies are noticing in their order books and income statements.

"The global investor has to take a number of trends into account. First, there
is now a gradual shift in the direction of more equities and other risk
investments. Second, there is an increased search for alternatives to government
bonds, which are perhaps on the way towards relinquishing their former role as a
risk-offsetter. This in turn places new demands on investment processes, and the
search for capable managers will become even more important," says Hans
Peterson, CIO Private Banking and Global Head of Investment Strategy.

"We cannot ignore the energy that characterises emerging markets. A larger
proportion of world trade now occurs within the EM sphere, reducing its need for
Western demand. Unemployment in these countries is comparatively low, while debt
is small and saving is large. The EM countries account for nearly 50 per cent of
total world GDP, adjusted for purchasing power, and this percentage is growing
rapidly. In other words, we must pay close attention to these countries when
discussing where to invest," Mr Peterson concludes.



For further information, please contact        Press contact
Hans Peterson                                  Elisabeth Lennhede,  Press & PR
CIO Private Banking and global head Investment [phone]
Strategy                                       [e-mail]
[phone]
                                               Ola Kallemur, Group Press Officer
Lars Gunnar Aspman                             [phone], [phone]
Senior analyst, Investment Strategy
[phone]


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[HUG#1466904]





Investment Outlook: 


http://hugin.info/1208/R/1466904/404632.pdf

Press release PDF: 


http://hugin.info/1208/R/1466904/404630.pdf




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