Ris client seminar oct 2010

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  • Emerging markets have eeked out a positive return over the year, followed by Asia Pacific ex-Japan and the Hang Seng. FTSE 100 has fallen the least, followed by the Europe, US and Japan. FTSE 250 has outperformed FTSE 100, up 20% over three months. M&A activity in recent weeks has provided a new boost to market sentiment.
  • Emerging markets have eeked out a positive return over the year, followed by Asia Pacific ex-Japan and the Hang Seng. FTSE 100 has fallen the least, followed by the Europe, US and Japan. FTSE 250 has outperformed FTSE 100, up 20% over three months. M&A activity in recent weeks has provided a new boost to market sentiment.
  • Emerging markets have eeked out a positive return over the year, followed by Asia Pacific ex-Japan and the Hang Seng. FTSE 100 has fallen the least, followed by the Europe, US and Japan. FTSE 250 has outperformed FTSE 100, up 20% over three months. M&A activity in recent weeks has provided a new boost to market sentiment.
  • Clearly valuation is important for long term performance. Shows p/e ratio at the start of decade and then subsequent 10 year annualised return. p/e now at fair value so would expect fair returns.
  • Ris client seminar oct 2010

    1. 1. An Introduction to Brooks Macdonald Asset Management September 2010 Market Update October 2010
    2. 2. Market Update – 3 years in Local Currency
    3. 3. Market Update – 3 years adjusted for Sterling
    4. 4. Markets – Conflicting forces <ul><li>Micro vs Macro </li></ul><ul><li>Inflation vs Deflation </li></ul>
    5. 5. Macro Economic Factors <ul><li>High unemployment </li></ul><ul><li>Lower consumer spending </li></ul><ul><li>Public sector cuts </li></ul><ul><li>Banks deleveraging </li></ul><ul><li>US dual deficit </li></ul><ul><li>Higher personal taxation </li></ul>
    6. 6. Micro – Company Level Factors <ul><li>Companies profitable </li></ul><ul><li>Low debt levels </li></ul><ul><li>High earnings / dividend yields </li></ul><ul><li>Low equity valuations </li></ul><ul><li>Companies generating lots of cash </li></ul><ul><ul><li>Merger & Acquisition (M&A) </li></ul></ul><ul><ul><li>Expansion </li></ul></ul><ul><ul><li>Higher dividends / share buybacks </li></ul></ul><ul><ul><li>Low equity allocations at present </li></ul></ul>
    7. 7. <ul><li>Markets – opportunities </li></ul><ul><li>Defensive UK & International dividend paying stocks (value opportunities) </li></ul><ul><li>Asia Pacific and Emerging Markets </li></ul><ul><li>Gold? </li></ul><ul><li>Cash on deposit? </li></ul><ul><li>Banking shares? </li></ul>
    8. 8. <ul><li>Markets – Risks </li></ul><ul><li>Government Bonds (Gilts) </li></ul><ul><li>PIIGS ( Portugal, Italy, Ireland, Greece & Spain) </li></ul><ul><li>Consumer </li></ul><ul><li>Inflation – additional Quantitative Easing </li></ul><ul><li>Exchange Rates </li></ul>
    9. 9. US Dollar versus Sterling
    10. 10. Little value in Gilts – End of the Bull market in Gilts????
    11. 11. Value in high yielding equities
    12. 12. Asia can afford to spend Source: IMF Financial stability report, Apr 09, CEIC, Nomura Global Economics Gross public debt-to-GDP ratios in 2010 OECD average
    13. 13. Why Asia Pacific/Emerging Markets? <ul><li>Increased financial and political stability </li></ul><ul><li>Current account surpluses/lower levels of debt (both government and individual) </li></ul><ul><li>Young populations </li></ul><ul><li>Growth of domestic demand, rather than just export-led economies, and continued growth of middle class/urbanisation </li></ul><ul><li>Diversified region (e.g. Australia – commodities; Singapore – finance; South Korea – manufacturing) </li></ul><ul><li>The progression of China from third world to 1 st world economy and the benefits for the region as a whole (e.g. tourism in Taiwan) </li></ul>
    14. 14. Asset Allocation range (2004-2010) BMAM Medium risk
    15. 15. <ul><li>Equity markets to remain volatile whilst market views polarised </li></ul><ul><li>Western governments weak </li></ul><ul><li>Double dip unlikely, slower growth likely </li></ul>Outlook
    16. 16. Disclaimer <ul><li>Brooks Macdonald Asset Management Limited are authorised and regulated by the Financial Services Authority. </li></ul><ul><li>This documentation may contain confidential or legally privileged information that is intended for the addressee only. Any views or opinions presented are solely those of the author and do not necessarily represent those of Brooks Macdonald. If you are not the intended recipient you are hereby notified that any disclosure, copying, distribution or reliance upon the contents of this documentation is strictly prohibited. If you have received this documentation in error, please notify the sender immediately , so that arrangements may be made for its proper delivery. </li></ul>

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