SEB Investment Outlook: Brighter world economic...

The world economic outlook is turning brighter. More regions are moving towards
a cyclical upturn that is becoming increasingly self-sustaining. Meanwhile
central banks in major industrialised countries are continuing to pursue
accommodative monetary policies, and there are clear efforts to nurture growth
around the world. These will be needed in order to overcome problematic
government finances - especially in parts of Europe, but also in the United
States. The danger of inflation in the emerging markets sphere is another source
of concern. In spite of this, the investment environment will continue to
improve, and there is potential for 2011 to be a good investment year. However,
it will become increasingly important to distinguish between markets, and their
position in the economic cycle will determine the rules of the game.

In recent years the markets have been characterised by dramatic fluctuations,
and the same is true of investors' risk appetite. Investors have either floored
the accelerator or put both feet on the brake, which is pronounced risk-on/risk-
off trading behaviour. Two main patterns have dominated. During periods when
there has been a high level of willingness to take risks, investors have bought
equities, corporate bonds and commodities on a broad front while selling
government bonds and US dollars. And when risk appetite has been low and the
focus has been on deflation worries, investors have done the opposite. Hans
Peterson, CIO Private Banking and Global Head of Investment Strategy maintains
that investors today must distinguish to a greater extent between different
markets in order to succeed.

"We foresee a larger number of driving forces in stock markets during 2011.
Profit forecasts will climb both this year and in 2012 in Sweden, the US and the
euro zone. Monetary policy is providing an economic stimulus in many places. And
commodities will benefit from improving demand in the traditional industrialised
countries of the OECD, while high demand from parts of the EM sphere will
continue.

We predict that the overall global economic growth will average about 4.5 per
cent during 2011-2012, which is well above the historical trend. GDP in the
emerging markets (EM) sphere - which accounts for nearly 50 per cent of the
world economy (adjusted for purchasing power) - will increase by 6.5 per cent in
both 2011 and 2012. Meanwhile, growth in the OECD countries looks set to end up
just below 3 per cent in both years.

 "One important question for 2011 is what strategy investors should apply and
what their allocation between sectors and between stock markets should be.
Looking ahead, an improved general economic situation, a stable profit outlook,
low share valuations and greater risk appetite justify optimism about the
performance of many of the world's stock markets, although reversals and brief
disruptions may naturally occur. We remain positive towards emerging markets,
but we are shifting our focus from giants like China, Brazil and India to stock
markets in less developed countries with large growth potential. In the short
term, we also see potential in the mature markets of Europe and the US. The
American economy has revealed upside surprises recently, and US companies are
strong after having undergone several years of restructuring," Mr Peterson says.

"Looking ahead, what will be especially important is choosing the right market.
Investors need to weigh in a number of key parameters - including changes in GDP
growth, monetary policy, financial stability and currency rate movements. So far
during 2011, there has been an unusually big difference between returns on
different stock exchanges. In January there was a gap of about 30 per cent
between the best- and worst-performing stock markets. This indicates that
investors are no longer as uniformly positive or negative towards risk assets
such as equities, but their investment decisions are instead based to a growing
extent on the conditions in individual markets. During 2011 we expect the risk
premium to fall in capital markets, which will make an increasing number of
alternative asset classes attractive," Mr Peterson concludes.



For further information, please contact        Press contact
Hans Peterson                                  Elisabeth Lennhede,  Press & PR
CIO Private Banking and global head Investment +46 70 763 9916
Strategy                                       [e-mail]
[phone]
                                               Ola Kallemur, Group Press Officer
Lars Gunnar Aspman                             [phone], [phone]
Senior analyst, Investment Strategy
[phone]




SEB is a leading Nordic financial services group. As a relationship bank, SEB in
Sweden and the Baltic countries offers financial advice and a wide range of
financial services. In Denmark, Finland, Norway and Germany the bank's
operations have a strong focus on corporate and investment banking based on a
full-service offering to corporate and institutional clients. The international
nature of SEB's business is reflected in its presence in 20 countries worldwide.
On 31 December 2010, the Group's total assets amounted to SEK 2,180bn while its
assets under management totalled SEK 1,399bn. The Group has about 17,000
employees. Read more about SEB at www.sebgroup.com.




Investment Outlook: 


http://hugin.info/1208/R/1491073/426687.pdf

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http://hugin.info/1208/R/1491073/426686.pdf




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