The document provides an outlook on global markets and asset classes for June 2012. It discusses ongoing issues in Europe, including uncertainty around Greece's future in the eurozone. It also mentions weakness in China's economy and concerns around derivatives exposures and potential defaults. Overall, the outlook remains cautious due to ongoing risks and challenges around the world.
The document provides an overview of the monthly market outlook for June 2012. It discusses the ongoing crisis in Europe, with a focus on the elections in Greece and France and how they have changed Europe profoundly. It notes the short-term focus remains on Europe and how Germany is now isolated in its refusal to support growth measures. It also briefly touches on concerns around Greece running out of money, Spain's banking troubles, and slowing growth in China. In conclusion, it states the fate of Greece and the euro remain the major cliffhangers for the month.
The document provides an outlook on global markets and asset classes for July 2012 from The Henley Group. It summarizes the recent meeting of the Council of Europe regarding the eurozone crisis, noting there was no formal agreement reached. It then provides an overview and assessment of various asset classes, including fixed income, currencies, property, equities, and commodities, noting concerns about the sustainability of government and private debts in developed economies while maintaining a neutral stance on property and selective positive views on other assets.
The document summarizes the February 2012 monthly market outlook from investment firm The Henley Group. It discusses the ongoing negotiations between Greece and its hedge fund creditors over restructuring Greek sovereign debt. It also covers the European Central Bank providing liquidity to European banks and governments to alleviate financing pressures as several countries need to refinance hundreds of billions in debt in the coming months. The report expresses concern about inflation risks from the rapid expansion of central bank balance sheets and recommends accumulating gold and silver as a hedge.
The document provides an outlook on global markets and asset classes for May 2012 from The Henley Group. Key points include:
- The period of calm in European markets following ECB intervention was short-lived as concerns over Spain's debt resurfaced.
- Problems facing the global economy like high debt levels remain systemic and structural.
- Spanish debt levels and unemployment are high while property markets and banks are struggling.
- Many banks remain highly leveraged which could lead to insolvency if losses are incurred.
- Political changes in Europe may undermine austerity efforts, adding further uncertainty.
- Precious metals and miners' shares are recommended as long term holdings.
The document provides an overview and assessment of various asset classes and markets for November 2011. It notes that European politicians seemed to start addressing the arithmetic of their debt crisis in October but the situation has since degenerated into a "tragic farce". Fixed income is viewed negatively due to downgrades in Europe and high funding costs in China negatively impacting businesses. Property prices are seen as stabilized after falls in 2009 but fundamentals remain weak in some areas. Equities are given a neutral outlook with weaknesses for the US noted around its fiscal position and housing market.
The document provides an overview and analysis of the global economic and market outlook for July 2012. It summarizes that European governments and banks are insolvent, US governments and banks also face challenges, and foreigners are abandoning the US dollar in favor of alternatives like gold. While central banks are providing liquidity, high debt levels, weak growth, and political uncertainties persist as major concerns. The outlook remains negative across many asset classes.
This document provides an outlook on global markets for January 2012 from The Henley Group. It discusses challenges and risks across various asset classes including fixed income, currencies, property, and equities in major regions. Some of the main points covered include ongoing issues in the Eurozone debt crisis, concerns about hard landings in China, the fragile state of the US economy, and political risks remaining high in Europe. Overall the outlook maintains a cautious stance due to numerous risks and uncertainties in the global economic and market environment.
Henley November Outlook Hong Kong 2012(Low)Tania Scott
The document provides an overview and assessment of various asset classes and geopolitical issues for the month of November 2012 by The Henley Group. It notes that the next few months bring uncertainty from leadership transitions in the US and China as well as ongoing debt issues in Europe and America. Fixed income is viewed negatively due to low yields and inflation risks. Property is given a neutral assessment with selective opportunities. Currencies are predicted to further devalue against commodities and the Yen is seen as a safe haven.
The document provides an overview of the monthly market outlook for June 2012. It discusses the ongoing crisis in Europe, with a focus on the elections in Greece and France and how they have changed Europe profoundly. It notes the short-term focus remains on Europe and how Germany is now isolated in its refusal to support growth measures. It also briefly touches on concerns around Greece running out of money, Spain's banking troubles, and slowing growth in China. In conclusion, it states the fate of Greece and the euro remain the major cliffhangers for the month.
The document provides an outlook on global markets and asset classes for July 2012 from The Henley Group. It summarizes the recent meeting of the Council of Europe regarding the eurozone crisis, noting there was no formal agreement reached. It then provides an overview and assessment of various asset classes, including fixed income, currencies, property, equities, and commodities, noting concerns about the sustainability of government and private debts in developed economies while maintaining a neutral stance on property and selective positive views on other assets.
The document summarizes the February 2012 monthly market outlook from investment firm The Henley Group. It discusses the ongoing negotiations between Greece and its hedge fund creditors over restructuring Greek sovereign debt. It also covers the European Central Bank providing liquidity to European banks and governments to alleviate financing pressures as several countries need to refinance hundreds of billions in debt in the coming months. The report expresses concern about inflation risks from the rapid expansion of central bank balance sheets and recommends accumulating gold and silver as a hedge.
The document provides an outlook on global markets and asset classes for May 2012 from The Henley Group. Key points include:
- The period of calm in European markets following ECB intervention was short-lived as concerns over Spain's debt resurfaced.
- Problems facing the global economy like high debt levels remain systemic and structural.
- Spanish debt levels and unemployment are high while property markets and banks are struggling.
- Many banks remain highly leveraged which could lead to insolvency if losses are incurred.
- Political changes in Europe may undermine austerity efforts, adding further uncertainty.
- Precious metals and miners' shares are recommended as long term holdings.
The document provides an overview and assessment of various asset classes and markets for November 2011. It notes that European politicians seemed to start addressing the arithmetic of their debt crisis in October but the situation has since degenerated into a "tragic farce". Fixed income is viewed negatively due to downgrades in Europe and high funding costs in China negatively impacting businesses. Property prices are seen as stabilized after falls in 2009 but fundamentals remain weak in some areas. Equities are given a neutral outlook with weaknesses for the US noted around its fiscal position and housing market.
The document provides an overview and analysis of the global economic and market outlook for July 2012. It summarizes that European governments and banks are insolvent, US governments and banks also face challenges, and foreigners are abandoning the US dollar in favor of alternatives like gold. While central banks are providing liquidity, high debt levels, weak growth, and political uncertainties persist as major concerns. The outlook remains negative across many asset classes.
This document provides an outlook on global markets for January 2012 from The Henley Group. It discusses challenges and risks across various asset classes including fixed income, currencies, property, and equities in major regions. Some of the main points covered include ongoing issues in the Eurozone debt crisis, concerns about hard landings in China, the fragile state of the US economy, and political risks remaining high in Europe. Overall the outlook maintains a cautious stance due to numerous risks and uncertainties in the global economic and market environment.
Henley November Outlook Hong Kong 2012(Low)Tania Scott
The document provides an overview and assessment of various asset classes and geopolitical issues for the month of November 2012 by The Henley Group. It notes that the next few months bring uncertainty from leadership transitions in the US and China as well as ongoing debt issues in Europe and America. Fixed income is viewed negatively due to low yields and inflation risks. Property is given a neutral assessment with selective opportunities. Currencies are predicted to further devalue against commodities and the Yen is seen as a safe haven.
The document provides an overview of the global economic and political outlook for November 2012. It notes that the next few months could see significant changes or events, as issues in the US, China, Europe and elsewhere may be coming to a head. The outlook remains uncertain, as America faces its "fiscal cliff" and debt ceiling, China transitions to new leadership, and debt problems continue to threaten Greece, Spain and the eurozone more broadly. However, the IMF may be preparing for reforms to the broken monetary system by revisiting an alternative proposed in the 1930s.
The document provides an overview and assessment of various global markets and asset classes in May 2012. It notes that the brief period of calm in European markets following ECB intervention had ended, with concerns shifting from Greece to problems in Spain. Fixed income investments are viewed negatively due to high debt levels and political uncertainty in Europe. Property prices are seen as neutral overall, with weakness in some areas offset by strength in others like Asia and London. US and Japanese equities are given negative and positive outlooks respectively, based on country-specific economic factors.
The document provides an overview of the global economic and political outlook for March 2012. It discusses the ongoing debt crisis in Europe, particularly focusing on Greece's struggling economy and negotiations over private sector involvement in debt relief. It notes rising gold and silver prices as a sign of uncertainty. The document also critiques policies in the US that undermine civil liberties and allow large banks and corporations to avoid accountability. It presents an uncertain and unstable political and economic landscape globally.
The document summarizes the October 2012 monthly market outlook from The Henley Group. It discusses how September 2012 was one of the most important months for markets since 2008, with the ECB and Fed announcing open-ended monetary stimulus. It predicts this will accelerate currency debasement and a potential hyperinflation. Real assets like precious metals are expected to perform well due to monetary stimulus inflating prices, while bonds and cash are risky. Geopolitical tensions are also discussed.
The document provides a summary of the monthly market outlook for October 2012. It discusses that September 2012 was one of the most important months for markets since 2008, with the ECB and Fed announcing open-ended unlimited monetary stimulus. It also summarizes views on various asset classes, including a negative outlook for fixed income given low government bond yields, and a neutral outlook for property with a focus on specialized assets.
The document summarizes the February 2012 outlook from The Henley Group. It discusses the ongoing negotiations between Greece and its hedge fund creditors over restructuring Greek sovereign debt. It also summarizes the European Central Bank providing nearly half a trillion euros to the European banking system to relieve financing pressures as several countries and banks have had their credit ratings downgraded. The outlook remains negative on the US dollar, British pound, and euro over the medium to long term.
The document discusses the uncertain global economic and political environment over the next few months. It notes that the US faces budget issues as tax cuts are set to expire and spending cuts will be implemented. China is also transitioning to new leadership. In Europe, Germany does not want to directly fund bailouts for troubled countries like Greece, Portugal, and Spain, making their conditions impossible to meet. The global monetary system is unsustainable long-term, and the IMF is exploring alternatives like those in the Chicago Plan from the 1930s.
Equities pushed higher over the summer months, recouping losses from May. However, the document notes the health of the world economy looks far from great, with Europe flirting with recession supported mainly by Germany. The document discusses how monetary easing is driving equity prices higher despite weak economic fundamentals. It provides an overview of various asset classes and regions with a generally neutral outlook, noting preferences for high dividend stocks and selectivity in alternative investments.
The document provides an outlook on various asset classes and markets for August 2012 from The Henley Group. It discusses concerns around ongoing weakness in the Eurozone and prospects of hyperinflation. Fixed income markets remain challenging with central banks trying to stimulate growth through low rates. Cautious outlook on property markets except for prime central London, with concerns around overvaluation in some markets like India, Brazil, and parts of China.
FINCOR Outlook 2013 Welcome To The QE PlanetJoão Pinto
1) The document provides an outlook and asset allocation recommendations for 2013.
2) Key themes are continued central bank quantitative easing in major economies and a modest global economic recovery.
3) Within this environment, the recommendations favor equities, real estate, commodities, and high yield bonds over government bonds.
O documento resume os principais acontecimentos econômicos e financeiros da última semana, incluindo pedidos de ajuda financeira na Espanha e Itália, intervenções dos bancos centrais na Europa e dados econômicos mistos nos EUA.
1) O documento resume as últimas notícias econômicas e financeiras da Europa, EUA, mercados emergentes e antecipa os principais eventos da semana.
2) Na Europa, destaca-se a revisão das condições do resgate financeiro da Espanha e a pressão da Grécia e Irlanda para renegociar seus empréstimos.
3) Nos EUA, os dados de emprego superaram as expectativas e as atas do FED diminuíram as expectativas de estímulo monetário adicional.
The document provides an overview of recent developments in global financial markets and the world economy. Key points include:
1) Equity markets showed weakness in the past 4 weeks after the announcement of QE3, while bank stocks sold off on mixed earnings reports.
2) The IMF cut its global growth forecasts and warned of downside risks from fiscal issues in the US and a possible slowdown in China. Growth is expected to remain sluggish.
3) S&P downgraded Spain's credit rating to BBB- with a negative outlook, citing risks to growth and budget targets. Moody's is expected to announce a rating action on Spain this month.
This document presents an investment case for a pair trade of going long on TeliaSonera and shorting Tele2. TeliaSonera faces potential cash inflows from transactions including the sale of its stake in Megafon and potential sales of its Spanish and Kazakhstan businesses. However, Tele2 faces some operational headwinds in Russia with no near-term spectrum award and uncertainty around a potential fourth license in the Netherlands. The document defines a price target and stop-loss level for the pair trade ratio of these two companies.
This document proposes a pair trade that is long on Roche Holding and short on Novartis. It provides an investment case for each company. Roche is seen as having solid recent performance and growth opportunities. Novartis faces near-term challenges from the loss of patent protection for its drug Diovan but is focused on long-term value. The document establishes target and stop-loss levels for the proposed pair trade ratio.
1) A época de apresentação de resultados da bolsa portuguesa começou, com mais da metade das cotadas do PSI 20 apresentando resultados esta semana.
2) As empresas mais expostas ao mercado doméstico deverão apresentar forte pressão nas receitas, enquanto as mais internacionalizadas podem surpreender positivamente.
3) Os analistas estarão atentos à evolução dos custos das empresas para avaliar seu desempenho, já que a capacidade de cortar despesas será fundamental num ambiente econômico adverso.
The document provides an outlook on global markets and asset classes for July 2012 from The Henley Group. It summarizes the recent meeting of the Council of Europe regarding the eurozone crisis, noting there was no formal agreement reached. It then provides an overview and assessment of various asset classes, including fixed income, currencies, property, equities, and commodities, noting concerns about the sustainability of government and private debts in developed economies while maintaining a neutral stance on property and selective positive views on other assets.
The document summarizes the Henley Group's market outlook for July 2012. It notes that European governments and banks are insolvent, and that the US is not far behind. While a meeting of the Council of Europe claimed to have a plan to solve the Eurozone crisis, there was actually no formal agreed plan. The debt crisis continues to deteriorate rapidly. Several countries have requested bailouts, yet the money to fund them is uncertain. Foreign holdings of US Treasuries and dollars are declining as other currencies like gold, yuan and others rise in prominence. In short, significant economic problems remain in Europe and globally despite political claims of progress.
The document provides an outlook on global markets and asset classes for July 2012 from The Henley Group. It summarizes the recent meeting of the Council of Europe regarding the eurozone crisis, noting there was no formal agreement reached. It then provides an overview and assessment of various asset classes, including fixed income, currencies, property, equities, and commodities, noting concerns about the sustainability of government and private debts in developed economies while maintaining a neutral stance on property and selective positive views on other assets.
The document summarizes the Henley Group's market outlook for July 2012. It notes that European governments and banks are insolvent, and that the US is not far behind. While a meeting of the Council of Europe claimed to have a plan to solve the Eurozone crisis, there was actually no formal agreed plan. The debt crisis continues to deteriorate rapidly. Several countries have requested bailouts, yet the money to fund them is uncertain. Foreign holdings of US Treasuries and dollars are declining as other assets like gold are pursued instead. In short, significant economic problems remain in Europe and globally.
The document provides an outlook on global markets and asset classes for July 2012 from The Henley Group. It summarizes the recent meeting of the Council of Europe regarding the eurozone crisis, noting there was no formal agreement reached. It then provides an overview and assessment of various asset classes, including fixed income, currencies, property, equities, and commodities, noting concerns about the sustainability of government and private debts in developed economies while maintaining a neutral stance on property and selective positive views on other assets.
The document provides an overview and assessment of various asset classes and geopolitical issues for the month of November 2012 by The Henley Group. It notes that the next few months bring uncertainty from leadership transitions in the US and China as well as ongoing debt issues in Europe and America. Fixed income is viewed negatively due to low yields and inflation risks. Property is given a neutral assessment with selective opportunities. Currencies are predicted to further devalue against commodities and the Yen is seen as a safe haven.
The document provides an overview of the global economic and political outlook for November 2012. It notes that the next few months could see significant changes or events, as issues in the US, China, Europe and elsewhere may be coming to a head. The outlook remains uncertain, as America faces its "fiscal cliff" and debt ceiling, China transitions to new leadership, and debt problems continue to threaten Greece, Spain and the eurozone more broadly. However, the IMF may be preparing for reforms to the broken monetary system by revisiting an alternative proposed in the 1930s.
The document provides an overview and assessment of various global markets and asset classes in May 2012. It notes that the brief period of calm in European markets following ECB intervention had ended, with concerns shifting from Greece to problems in Spain. Fixed income investments are viewed negatively due to high debt levels and political uncertainty in Europe. Property prices are seen as neutral overall, with weakness in some areas offset by strength in others like Asia and London. US and Japanese equities are given negative and positive outlooks respectively, based on country-specific economic factors.
The document provides an overview of the global economic and political outlook for March 2012. It discusses the ongoing debt crisis in Europe, particularly focusing on Greece's struggling economy and negotiations over private sector involvement in debt relief. It notes rising gold and silver prices as a sign of uncertainty. The document also critiques policies in the US that undermine civil liberties and allow large banks and corporations to avoid accountability. It presents an uncertain and unstable political and economic landscape globally.
The document summarizes the October 2012 monthly market outlook from The Henley Group. It discusses how September 2012 was one of the most important months for markets since 2008, with the ECB and Fed announcing open-ended monetary stimulus. It predicts this will accelerate currency debasement and a potential hyperinflation. Real assets like precious metals are expected to perform well due to monetary stimulus inflating prices, while bonds and cash are risky. Geopolitical tensions are also discussed.
The document provides a summary of the monthly market outlook for October 2012. It discusses that September 2012 was one of the most important months for markets since 2008, with the ECB and Fed announcing open-ended unlimited monetary stimulus. It also summarizes views on various asset classes, including a negative outlook for fixed income given low government bond yields, and a neutral outlook for property with a focus on specialized assets.
The document summarizes the February 2012 outlook from The Henley Group. It discusses the ongoing negotiations between Greece and its hedge fund creditors over restructuring Greek sovereign debt. It also summarizes the European Central Bank providing nearly half a trillion euros to the European banking system to relieve financing pressures as several countries and banks have had their credit ratings downgraded. The outlook remains negative on the US dollar, British pound, and euro over the medium to long term.
The document discusses the uncertain global economic and political environment over the next few months. It notes that the US faces budget issues as tax cuts are set to expire and spending cuts will be implemented. China is also transitioning to new leadership. In Europe, Germany does not want to directly fund bailouts for troubled countries like Greece, Portugal, and Spain, making their conditions impossible to meet. The global monetary system is unsustainable long-term, and the IMF is exploring alternatives like those in the Chicago Plan from the 1930s.
Equities pushed higher over the summer months, recouping losses from May. However, the document notes the health of the world economy looks far from great, with Europe flirting with recession supported mainly by Germany. The document discusses how monetary easing is driving equity prices higher despite weak economic fundamentals. It provides an overview of various asset classes and regions with a generally neutral outlook, noting preferences for high dividend stocks and selectivity in alternative investments.
The document provides an outlook on various asset classes and markets for August 2012 from The Henley Group. It discusses concerns around ongoing weakness in the Eurozone and prospects of hyperinflation. Fixed income markets remain challenging with central banks trying to stimulate growth through low rates. Cautious outlook on property markets except for prime central London, with concerns around overvaluation in some markets like India, Brazil, and parts of China.
FINCOR Outlook 2013 Welcome To The QE PlanetJoão Pinto
1) The document provides an outlook and asset allocation recommendations for 2013.
2) Key themes are continued central bank quantitative easing in major economies and a modest global economic recovery.
3) Within this environment, the recommendations favor equities, real estate, commodities, and high yield bonds over government bonds.
O documento resume os principais acontecimentos econômicos e financeiros da última semana, incluindo pedidos de ajuda financeira na Espanha e Itália, intervenções dos bancos centrais na Europa e dados econômicos mistos nos EUA.
1) O documento resume as últimas notícias econômicas e financeiras da Europa, EUA, mercados emergentes e antecipa os principais eventos da semana.
2) Na Europa, destaca-se a revisão das condições do resgate financeiro da Espanha e a pressão da Grécia e Irlanda para renegociar seus empréstimos.
3) Nos EUA, os dados de emprego superaram as expectativas e as atas do FED diminuíram as expectativas de estímulo monetário adicional.
The document provides an overview of recent developments in global financial markets and the world economy. Key points include:
1) Equity markets showed weakness in the past 4 weeks after the announcement of QE3, while bank stocks sold off on mixed earnings reports.
2) The IMF cut its global growth forecasts and warned of downside risks from fiscal issues in the US and a possible slowdown in China. Growth is expected to remain sluggish.
3) S&P downgraded Spain's credit rating to BBB- with a negative outlook, citing risks to growth and budget targets. Moody's is expected to announce a rating action on Spain this month.
This document presents an investment case for a pair trade of going long on TeliaSonera and shorting Tele2. TeliaSonera faces potential cash inflows from transactions including the sale of its stake in Megafon and potential sales of its Spanish and Kazakhstan businesses. However, Tele2 faces some operational headwinds in Russia with no near-term spectrum award and uncertainty around a potential fourth license in the Netherlands. The document defines a price target and stop-loss level for the pair trade ratio of these two companies.
This document proposes a pair trade that is long on Roche Holding and short on Novartis. It provides an investment case for each company. Roche is seen as having solid recent performance and growth opportunities. Novartis faces near-term challenges from the loss of patent protection for its drug Diovan but is focused on long-term value. The document establishes target and stop-loss levels for the proposed pair trade ratio.
1) A época de apresentação de resultados da bolsa portuguesa começou, com mais da metade das cotadas do PSI 20 apresentando resultados esta semana.
2) As empresas mais expostas ao mercado doméstico deverão apresentar forte pressão nas receitas, enquanto as mais internacionalizadas podem surpreender positivamente.
3) Os analistas estarão atentos à evolução dos custos das empresas para avaliar seu desempenho, já que a capacidade de cortar despesas será fundamental num ambiente econômico adverso.
The document provides an outlook on global markets and asset classes for July 2012 from The Henley Group. It summarizes the recent meeting of the Council of Europe regarding the eurozone crisis, noting there was no formal agreement reached. It then provides an overview and assessment of various asset classes, including fixed income, currencies, property, equities, and commodities, noting concerns about the sustainability of government and private debts in developed economies while maintaining a neutral stance on property and selective positive views on other assets.
The document summarizes the Henley Group's market outlook for July 2012. It notes that European governments and banks are insolvent, and that the US is not far behind. While a meeting of the Council of Europe claimed to have a plan to solve the Eurozone crisis, there was actually no formal agreed plan. The debt crisis continues to deteriorate rapidly. Several countries have requested bailouts, yet the money to fund them is uncertain. Foreign holdings of US Treasuries and dollars are declining as other currencies like gold, yuan and others rise in prominence. In short, significant economic problems remain in Europe and globally despite political claims of progress.
The document provides an outlook on global markets and asset classes for July 2012 from The Henley Group. It summarizes the recent meeting of the Council of Europe regarding the eurozone crisis, noting there was no formal agreement reached. It then provides an overview and assessment of various asset classes, including fixed income, currencies, property, equities, and commodities, noting concerns about the sustainability of government and private debts in developed economies while maintaining a neutral stance on property and selective positive views on other assets.
The document summarizes the Henley Group's market outlook for July 2012. It notes that European governments and banks are insolvent, and that the US is not far behind. While a meeting of the Council of Europe claimed to have a plan to solve the Eurozone crisis, there was actually no formal agreed plan. The debt crisis continues to deteriorate rapidly. Several countries have requested bailouts, yet the money to fund them is uncertain. Foreign holdings of US Treasuries and dollars are declining as other assets like gold are pursued instead. In short, significant economic problems remain in Europe and globally.
The document provides an outlook on global markets and asset classes for July 2012 from The Henley Group. It summarizes the recent meeting of the Council of Europe regarding the eurozone crisis, noting there was no formal agreement reached. It then provides an overview and assessment of various asset classes, including fixed income, currencies, property, equities, and commodities, noting concerns about the sustainability of government and private debts in developed economies while maintaining a neutral stance on property and selective positive views on other assets.
The document provides an overview and assessment of various asset classes and geopolitical issues for the month of November 2012 by The Henley Group. It notes that the next few months bring uncertainty from leadership transitions in the US and China as well as ongoing debt issues in Europe and America. Fixed income is viewed negatively due to low yields and inflation risks. Property is given a neutral assessment with selective opportunities. Currencies are predicted to further devalue against commodities and the Yen is seen as a safe haven.
The document provides an overview and assessment of various asset classes and geopolitical issues for the month of November 2012 by The Henley Group. It notes that the next few months bring uncertainty from leadership transitions in the US and China as well as ongoing debt issues in Europe and America. Fixed income is viewed negatively due to risks of higher inflation from monetary easing. Property is given a neutral assessment with selective opportunities seen in Asia.
The document provides a summary of the monthly market outlook for October 2012. It discusses that September 2012 was one of the most important months for markets since 2008, with the ECB and Fed announcing open-ended unlimited monetary stimulus. It also summarizes views on various asset classes, including a negative outlook for fixed income given low government bond yields, and a neutral outlook for property with a focus on specialized assets.
September 2012 was one of the most important months for markets since 2008, as both the ECB and Fed announced plans for open-ended, unlimited monetary stimulus. This stimulus will likely lead to higher inflation in the short term and further debase paper currencies over the long run. Precious metals and mining funds are expected to perform well due to ongoing monetary stimulus, while financial assets face increasing risk after adjusting for inflation.
Equity prices have risen over the summer despite a weak global economy. Europe remains at risk of recession while China is showing signs of slowing. The prospect of further monetary easing is driving stock prices higher even as economic data remains poor. Agricultural commodity prices have risen sharply due to drought conditions, making agribusiness equities more attractive investments. The US Federal Reserve is expected to take substantial easing action to support the economy should growth stall further.
The Henley Group Monthly Outlook September 2012jenks23
Equity prices have risen over the summer despite a weak global economy. Europe remains at risk of recession while China is showing signs of slowing. The document suggests equity prices have risen due to expectations of further monetary easing from central banks. It recommends agricultural equities as crops face drought conditions and reviews minutes from the US Federal Reserve that indicate consensus for more stimulus if growth falters further. Gold and silver prices jumped on the Fed minutes as investors anticipate additional quantitative easing.
Henley December Outlook Hong Kong 2012 LowTania Scott
The document provides an overview and analysis of global markets and economic conditions in December 2012. It discusses uncertainties in the US around resolving the fiscal cliff issues and debates around raising the debt ceiling. In Europe, more bailouts are being crafted for Greece but are only temporary fixes. Japan may see new stimulus policies from an incoming government. Across asset classes, the outlook is neutral to negative due to ongoing debt and economic challenges facing developed nations. High dividend stocks and select property investments are preferred over fixed income given inflation risks.
The document provides an overview and analysis of global markets and economic conditions in December 2012. It discusses uncertainties in the US around resolving the fiscal cliff issues and the unsustainable level of national debt. In Europe, more bailouts are being crafted for Greece but the experiment continues failing. Japan may see new stimulus but promised results seem like "Christmas magic". Overall the outlook expresses skepticism around resolutions to major economic issues and sees continued monetary easing fueling future inflation concerns.
The document provides an overview and analysis of global markets and economic conditions in December 2012. It discusses uncertainties in the US around resolving the fiscal cliff issues and debt ceiling debates. In Europe, more bailouts are being crafted for Greece but fail to solve underlying issues. Japan may see new stimulus but past attempts have not succeeded. Overall the outlook expresses skepticism around resolutions to major economic problems and sees continued monetary easing fueling future inflation risks.
Henley December Outlook Singapore 2012 Optimisedjaydean71
The document provides an overview and outlook of various asset classes for December 2012 from The Henley Group. It discusses uncertainties in the markets as holidays approach and whether "Christmas magic" will provide solutions. It also summarizes views on fixed income, currencies, property, equities and other asset classes with a focus on developments in the US, Europe, UK, Japan, Hong Kong and Singapore. The outlook is mostly neutral to negative given continued uncertainties and concerns over fiscal and debt issues in developed economies.
The document provides an outlook on various asset classes and markets for August 2012 from The Henley Group. It discusses ongoing concerns around the LIBOR manipulation scandal and hopes that issues with unallocated gold schemes will be similarly exposed. The outlook then covers views on currencies, fixed income, property, equities, commodities, and alternative investments. Fixed income is viewed negatively due to challenges facing central banks and struggling economies. Commercial property is given mixed views, with caution on US and UK markets but growth seen in other regions.
The document provides an outlook on various asset classes and markets for August 2012 from The Henley Group. It discusses views on currencies, fixed income, property, equities, commodities, and alternative investments. The outlook expresses negative views on the US dollar, British pound, and euro, as well as fixed income generally. It notes slowing economic data from China and concerns about high home prices in some markets like India, Brazil, and parts of China.
- The document provides an outlook on various asset classes and markets for February 2013 from Henley, a wealth management firm.
- It discusses the decoupling of markets and fundamentals due to money printing by developed nations, and sees a currency crisis as likely within the next couple years.
- In equities, it is positive in the short-term due to quantitative easing inflating prices, but negative on fundamentals. Real estate prices are stabilizing in select areas like Singapore, London, and signs of stability in the US, but further weakness is expected elsewhere. Fixed income carries inflation risk from monetary easing.
The document discusses recent market trends and the relationship between two opposing forces - the "Bubble Chain" and the "Deleveraging Chain".
The Bubble Chain refers to rising asset prices driven by central bank liquidity, moving from government bonds to corporate credit to equities. However, a Deleveraging Chain is also occurring, shown through weakness in commodities, emerging markets, and gold. These two chains send inconsistent signals about the economy.
The document argues one chain will have to give way at some point, allowing for a realignment. It also analyzes gold's recent sharp decline, putting forward several hypotheses for what triggered it and what implications it could have. The author remains uncertain about which
Affect of us & european downturn on indian stock market
Henley Outlook June12
1. Monthly Market Outlook
June 2012
Being an asset allocator is all about risk, and sometimes reward; but
now it feels more like juggling hand grenades. Never a dull moment!
The short-term focus remains on Europe, where much has happened
in the last month. As expected, the day of the French presidential
election and the Greek parliamentary elections, 6th May, will probably
go down as the day Europe changed profoundly.
The Henley Outlook
June 2012
THE WEALTH MANAGEMENT PROFESSIONALS
2. The Henley Outlook
June 2012
Overview
ASSET CLASS HOUSE VIEW REMARKS
Fixed Income Investment Grade
High Yield
Student accommodation only
Property
Equities US
Japan
UK
Europe Ex UK
Australia
ASEAN
Broad equity exposure
Greater China including the region preferred
India
Other Emerging Markets
Commodities Energy
Precious Metals
Industrial Metals
Agriculture
Selective strategies only
Alternative Investments
Key: Positive Neutral Negative
The Henley Group Limited The Henley Outlook: 2
An SFC Licensed investment adviser in Hong Kong Hong Kong, Singapore & Shanghai
Suite 2004-08, 20/F, St George’s Building, 2 Ice House Street, Central, Hong Kong
info@thehenleygroup.com.hk www.thehenleygroup.com.hk
3. The Henley Outlook
June 2012
Global Overview
Being an asset allocator is all about risk, and
sometimes reward; but now it feels more like
juggling hand grenades. Never a dull moment!
The short-term focus remains on Europe, where
much has happened in the last month. As expected,
the day of the French presidential election and
the Greek parliamentary elections, 6th May, will
probably go down as the day Europe changed
profoundly. It was the day people were heard in
several languages to say “No!” to austerity; but it
was also the day the crisis in Europe mushroomed
from being largely financial into a fully-fledged
political crisis.
The G8 and European Union summits, which took
place shortly afterwards, were acrimonious affairs
in which Germany refused to join the cheerleaders
for growth, knowing full well who would have to foot the bill. Suddenly, instead of being in control of Europe, Germany
seems isolated and on the back foot. It is tempting to think that Germany will decide that its best interests lie in being the
first to leave the euro itself, after which the new deutsche mark would revalue against the euro and help the euro zone
economy rebalance. Doing so might even get Angela Merkel re-elected in 2013. There’s a thought!
Of more immediate concern, however, is that Greece could run out of money before the end of the month if bailout funds
are cut off after the election. The Greek banks already have run out and are on various forms of life support after a long,
slow-motion run on deposits.
The run on the Spanish banks is also continuing. They lost another EUR31bn of deposits in April. In addition to deposit
flight, it is estimated that they will need a further EUR200bn to cover loan losses, mainly on real estate. At the same
time, Spain’s seventeen regional governments need to refinance some EUR36bn of debt this year, and have nowhere to
go for it but the central government. Just one bank, Bankia, is already costing the Spanish government EUR23.5bn it
does not have.
We don’t need jugglers. We need conjurers!
The proposal from Germany for a EUR2.3tn European Redemption Pact offers one possible route to salvation. Euro zone
member sovereign debts in excess of 60% of gross domestic product would be transferred to a separate, pooled fund
and paid off jointly over twenty years using designated tithes. This is akin to Germany’s “Solidarity Surcharge” which was
used to pay for the reunification with East Germany in the 1990s. About EUR115bn a year, plus interest. Hmmm. The fact
that nations would have to pledge their gold reserves as collateral against default reinforces our conviction that gold will
be at the heart of the outcome of the global mess.
Perhaps an even bigger development for gold is that the Bank of International Settlements, which sets capital-adequacy
rules for banks globally, is considering raising gold from “Tier 3” (which wears a 50% haircut when calculating capital
adequacy) to “Tier 1” (which suffers no haircut). This could be a game changer for gold. It would be a major endorsement
of its role in preserving wealth and as a store of value from the highest financial authority. It would lead to significant
purchases of gold by major financial institutions; to a reappraisal of its value with respect to other Tier 1 capital (such as
sovereign debt), and provide diversification from US dollars and US treasuries.
An upward revaluation of gold would seem like the logical next step!
The Henley Group Limited The Henley Outlook: 3
An SFC Licensed investment adviser in Hong Kong Hong Kong, Singapore & Shanghai
Suite 2004-08, 20/F, St George’s Building, 2 Ice House Street, Central, Hong Kong
info@thehenleygroup.com.hk www.thehenleygroup.com.hk
4. The Henley Outlook
June 2012
Amid all this hand wringing about Europe and its failed experiment, it would be a mistake to take one’s eyes off the other
hand grenades.
In China, bank data suggest that a major credit slowdown has begun. Demand for cars and homes has fallen, and
inventories of both are rising. Manufacturing growth and house prices have both fallen for seven consecutive months.
Manufacturing is actually contracting. We can expect more monetary loosening and a lower yuan.
Lest I be accused of being perennially negative (stuff and nonsense!), US consumer confidence last month hit the highest
level since October 2007, when the S&P500 peaked. This is a somewhat puzzling piece of news. Real incomes are falling
and job creation is not keeping pace with the rising population, more of whom than ever – forty-six million – are on food
stamps. The markets are jittery as at the end of this month we approach the conclusion of Operation Twist (the Federal
Reserve’s current method of keeping longer-dated yields repressed).
Asset prices are crying out for more stimulus and the time for announcing what form it will take is running out. It would
be considered too overtly political for the Federal Reserve to make an announcement too close to the November elections;
but, no doubt falling stock markets and one or two weak employment reports will trip the money printing presses back
to life in the next couple of months. The US only raises forty-six cents out of every dollar it spends from taxes. The other
fifty-four cents have to come from other sources. The Bank of England, the European Central Bank and the Bank of Japan
will also print, but not necessarily in that order. China will also print once the leadership transition is out of the way. All
will deny it, until they actually do it.
Another hand grenade (Warren Buffett called them “financial weapons of mass destruction”) is the derivatives universe.
There have been numerous explosions over the years (Long-term Capital Management (LTCM) in 1998 and the train wreck
that was 2008, to name but two). Now we have JP Morgan Chase struggling to contain a detonation. So far they have
admitted to USD2bn of damage, but it is thought to have risen since to USD8bn (some say an awful lot more).
Last week came the announcement that a US government committee chaired by the Secretary of the Treasury is to
declare the COMEX and the ICE (two New York derivatives exchanges) systemically important, ie, too big to fail. This
would mean that, in the event of the commodity futures default, we have been postulating for some time, the Federal
Reserve would pay cash to the defaulted party. Why are they preparing for a default, and why now? Something to do with
Iran, I wonder? Or Morgan?
But the real cliff hanger this month is of course the fate of Greece and the euro. Neither the Greeks nor the technocrats
nor the politicians nor the bankers want Greece to leave the euro. The Greek people are still in denial about the euro being
at the root of their ills. They associate the common currency with easy credit, low interest rates, low inflation and good
times. They associate the drachma with the bad old days of scarce credit, high interest rates and high inflation.
Unfortunately, that Greece will leave the euro this month is not a foregone conclusion. However, although an unimaginably
bitter and expensive pill to swallow, leaving is what Greece needs to do. The greater tragedy for them would be if they did
not. Perhaps Spain will beat them to it!
Peter Wynn Williams
Investment Director
pww@thehenleygroup.com.hk
The Henley Group Limited The Henley Outlook: 4
An SFC Licensed investment adviser in Hong Kong Hong Kong, Singapore & Shanghai
Suite 2004-08, 20/F, St George’s Building, 2 Ice House Street, Central, Hong Kong
info@thehenleygroup.com.hk www.thehenleygroup.com.hk
5. The Henley Outlook
June 2012
Cash & Currencies
USD Index (Source: Bloomberg)
Summary
• Not a lot of activity this month across the board.
• JPY was flat but remained weaker YTD against USD for the first reversal in trend in a long time. It did however rebound
slightly from strong support at 84.
• GBP/EUR was also range bound, but since Dec2008 the GBP has gradually been regaining strength against the EUR,
but not at a strong pace. Focus for the euro turned to Spain throughout April.
• AUD weakened further against the USD, but remains above parity.
• The trading band for the SGD was altered to ‘stronger’ by the Monetary Authority of Singapore (MAS) following their
biannual meeting. This change was due to increased GDP and increased inflationary pressure.
HENLEY ASSESSMENT:
Unchanged: Negative USD, GBP and EUR over medium-to-long term against trade-weighted basket of
currencies. The euro is unlikely to continue in its current form. If the risk appetite remains strong, then we
should start to see funds flowing out of the ‘safe haven’ USD, thus weakening its position.
The Henley Group Limited The Henley Outlook: 5
An SFC Licensed investment adviser in Hong Kong Hong Kong, Singapore & Shanghai
Suite 2004-08, 20/F, St George’s Building, 2 Ice House Street, Central, Hong Kong
info@thehenleygroup.com.hk www.thehenleygroup.com.hk
6. The Henley Outlook
June 2012
Fixed Income
Positives
• Interest rates will remain low for the foreseeable future as economic recovery is anaemic in most developed economies.
We believe the central banks will come up with more easing measures and the labour market —not inflation— holds
the key to future.
• Overall credit quality of Asian and emerging markets remains intact with low levels of debt and record high reserve
cushions.
Negatives
• Yields of US treasuries, German bunds and UK gilts all fell to record low levels (10-yr: 1.74%, 1.36% and 1.76%
respectively) as euro zone sparked further safe-haven buying of top-tier government bonds. German borrowing costs
have plunged to the lowest on record amid mounting concern that Greece will exit the currency area.
• Spain is set to recapitalise Bankia through a government-bonds-for-share-swap arrangement, which would increase
pressure to debt issuance. More importantly, investors remain sceptical that Spain has dealt adequately with its distressed
lenders, sending its 10-yr government bond yields up 17bps to 6.48% (a new record spread vs. German bund).
HENLEY ASSESSMENT:
Negative. Recovery rate is the average
proportion of bad debt recovered. It is an
important validation of default probabilities
and default correlations which is often
neglected in credit risk analysis. In the past
decade, recoveries normally rise in a low
default environment and vice versa. The
relationship between higher recovery rates
and lower default has diverged significantly
over the past 24 months. The graph (shown
right) is a reflection of the current challenging
environment for raising capital, despite
numerous interventions by the central banks.
Given the weakening trend in recovery, we
should be more conservative in analysing source: Deutsche Bank, M&G Investments, April 2012
corporate credit and its compensation to
investors, even in the face of low default rates.
The Henley Group Limited The Henley Outlook: 6
An SFC Licensed investment adviser in Hong Kong Hong Kong, Singapore & Shanghai
Suite 2004-08, 20/F, St George’s Building, 2 Ice House Street, Central, Hong Kong
info@thehenleygroup.com.hk www.thehenleygroup.com.hk
7. The Henley Outlook
June 2012
Property
Positives
• Estate agent Knight Frank reported that the continuing fear that the euro would collapse is contributing to the rise
in central London property values as buyers from Greece, Spain and now France are actively seeking a safe haven for
their money. In the first quarter, overseas buyers accounted for 62% of purchases in central London, a figure which
compares to 55% in Q12011. Prime Central London property prices increased by 1.1% in March; YOY prices increased
by 11.3%. Central London property prices are now 20% above their 2007 peak. A shortage of housing stock for sale in
Central London is pushing buyers out into more peripheral areas.
• In Singapore, home sales climbed to 6,458 units in Q12012, the highest quarterly figure since 1996. Developers have
increased sales by offering smaller units (called “shoebox” apartments, as they are smaller than 50sqm in size).
Shoebox apartments accounted for 27% of new sales in the first quarter, when private home prices fell for the first
time in almost three years following curbs that included more stringent mortgage requirements and higher taxes.
However, it is thought that Singapore’s property market is heading for a soft landing.
• The new Hong Kong Financial Secretary John Tsang is “highly concerned about the risk of a price bubble” as low
interest rates still persist. His stated intention is to release land supply and it is thought he will be less likely to support
residential property prices upon price falls. Hong Kong housing prices have risen more than 70% between the start
of 2009 and mid-2011 on record low mortgage rates and an influx of Chinese buyers. Centaline Property Agency has
stated that prices have risen almost 4% this year, after falling 5% in 2H 2011.
Negatives
• According to Nationwide, British home prices edged lower in April and YOY are down 0.9%. This comes at a time when
home loans are becoming more expensive because of rising funding costs as a result of the European credit crisis.
According to consumer group Which, one in five of the homeowners they surveyed said that a £100 increase in their
monthly mortgage payment would leave them without money for essentials – like food.
• Australian home prices fell in the first quarter of 2012 by 1.1%, and 4.5% YOY. This is the longest losing streak in
almost a decade and leaves Australia with the highest borrowing costs amongst developed nations. As a result, the
Reserve Bank of Australia cut the benchmark interest rate by 0.5% to 3.75%, the deepest reduction in three years.
• In China, the government continues to strike a delicate balance to slow housing price growth while also trying to avoid
a collapse. Home sales fell 18% in the first quarter and contributed to the slowest economic growth in three years.
Borrowing costs for first time homebuyers are being reduced to encourage wider property ownership, but the government
is keeping the curbs in place to stem the speculators who have helped push up prises by up to 140% since 1998.
HENLEY ASSESSMENT:
Neutral. Property prices generally stabilised in 2010 and 2011 after significant falls in 2009. Property values
have recovered in selected areas such as Asia and London, but fundamentals remain weak elsewhere. However,
we still consider some specialised property assets (such as student accommodation/ground rent income) to
merit inclusion in our portfolios. Other than these investments, we would suggest that clients do not invest
further at this time.
The Henley Group Limited The Henley Outlook: 7
An SFC Licensed investment adviser in Hong Kong Hong Kong, Singapore & Shanghai
Suite 2004-08, 20/F, St George’s Building, 2 Ice House Street, Central, Hong Kong
info@thehenleygroup.com.hk www.thehenleygroup.com.hk
8. The Henley Outlook
June 2012
Equities
US
Positives
• US economy is highly flexible, resilient and leads world in technology and innovation.
• Federal Reserve has forecast that rates will remain unchanged until at least late 2014.
• Further monetary easing in 2H12 will boost asset prices in nominal terms.
Negatives
• National debt: USD15.75tn and rising; debt to GDP: 104%and rising. Absurdly unsustainable.
• Housing market is in depression. Prices at 10-year lows.
• Real incomes falling; only 41.6% of working-age Americans has a full-time job.
• Political system dysfunctional; possible fiscal cliff and debt ceiling to negotiate at end of 2012.
HENLEY ASSESSMENT:
Negative. The latest consumer earnings and credit numbers show ongoing structural deterioration in consumer
liquidity. With lack of positive, real (inflation-adjusted) growth in income, there can be no sustainable growth
in real personal consumption (71% of GDP). Temporary consumption gains could be fuelled by debt expansion,
but that option is not available to most consumers. Broad economic activity remains likely to bottom-bounce
for the foreseeable future.
JAPAN
Positives
• Despite its recent rebound to JPY79, JPY is
likely to continue to weaken on prospects of
more easing. Another important shift is the
USD-JPY pair is no longer strongly positively
correlated to US stocks and US yields. We are
monitoring critical elements such as overseas
direct investment flows and current account
balance.
Negatives
• Fitch Ratings cut Japan’s sovereign rating to
A-plus citing Japan’s spiralling debt problem
(now c.230% of GDP).
• Japan’s jobless rate rose for first time in three
months to 4.6%, underscoring concern that an
economic recovery will lose momentum in the
face of Europe’s crisis.
HENLEY ASSESSMENT:
Neutral. Bank of Japan (BOJ) has been fighting political pressure and excessive market expectations since it
declared the inflation goal of 1%. The central bank has recently announced it will buy an additional JPY10tn
(USD124.74bn) in Japanese Government Bonds (JGBs) and extend the maturity of bonds it buys from two-yr
to three-yr. Yet, policymakers are calling for BOJ to purchase even longer-term JGBs and are threatening to
change laws to reduce the independence of BOJ. In our opinion, politics can be a distraction from efforts of
improving fiscal conditions and strengthening growth potential in Japan.
The Henley Group Limited The Henley Outlook: 8
An SFC Licensed investment adviser in Hong Kong Hong Kong, Singapore & Shanghai
Suite 2004-08, 20/F, St George’s Building, 2 Ice House Street, Central, Hong Kong
info@thehenleygroup.com.hk www.thehenleygroup.com.hk
9. The Henley Outlook
June 2012
UK
Positives
• The jobless rate fell to 8.2% of the workforce, the lowest since Aug11, compared to 8.3% in the previous month. In
addition, Apr12 jobless claims fell by 13,700 versus expectations for a 5,000 rise.
• Concern over UK’s high inflation rate appeared to trump fears of a renewed recession, as BoE allowed its GBP 50bn
programme of gilts purchases to come to an end.
Negatives
• The Bank of England (BoE) lowered its growth and inflation forecasts and is tuning its contingency plans for weaker
growth caused by the European debt crisis. Growth forecast for the year was cut to 0.8% from 1.2%.
• In its quarterly Inflation Report the BoE forecast that UK inflation will remain above 2% for longer than previously
forecast, but will drop to +1.6% in two years, below the 2% inflation target.
• The same report also said that the euro zone crisis was not the only issue weighing on the UK economy, with volatile
energy and commodity costs, and the squeeze on household earnings also having an impact.
HENLEY ASSESSMENT:
Negative. There is no doubt the impact of a breakup of the euro zone on the UK would be bad – at least in
the short run – even if the longer-run effect of breakup is less clear cut. Short-run hits would probably include
lower exports to Greece and other euro zone countries; weaker asset prices; a rise in sterling compared with
the current euro zone average; a direct hit to financial sector output, and a new credit crunch and a drop
in confidence. The broader concern is a sharp fall in market confidence which might exacerbate the severe
shortage of small business lending and trigger more job cuts in Britain’s financial sector.
EUROPE ex UK
Positives
• The euro area avoided its second recession in three years as 0.5% growth in Germany offset contractions in peripheral areas.
Negatives
• The 6May12 election in Greece left the two parties that supported the international rescue as part of an interim
government this year, New Democracy and Pasok, short of the seats needed for a majority in Parliament.
• The votes also propelled the Syriza party, which opposes the austerity measures, to second place. The parties will
reconvene for a second election on 17Jun12 and there are fears that Syriza party will win the majority of the votes.
Failure to form a government that would implement the bailout terms would mean a “probable” exit from the currency
union.
• Greece’s credit rating was cut to CCC from B- by Fitch Ratings on concerns the country won’t be able to muster the
political support needed to sustain its membership in the euro zone.
• Spain was forced to nationalise its fourth largest bank, Bankia, floated only last year. The bank share price sank 14%
after depositors reportedly withdrew EUR1bn in the past week.
• Moody’s downgraded 16 Spanish banks, including Banco Santander, the euro zone’s largest bank, citing a weak
economy and the government’s reduced ability to support troubled lenders.
HENLEY ASSESSMENT:
Strongly negative. With the Syriza party gaining traction in the Greek elections and Francois Hollande voted
in as the French President, the message to the euro governments is clear: the public is fed up with austerity
measures. More importantly, the idea of a Greek exit from the euro zone has been bandied around recently.
Initial calculations of the cost of a Greek exit has been put as high as USD1tn. If Greece were to default and
leave the euro, direct costs would include the hit that other European countries and the IMF would have to
take on holdings of Greek debt. However, what really scares the economists is the spillover effect of a Greek
departure, especially the contagion risks threatening other fragile economies, such as that of Italy and Spain.
The Henley Group Limited The Henley Outlook: 9
An SFC Licensed investment adviser in Hong Kong Hong Kong, Singapore & Shanghai
Suite 2004-08, 20/F, St George’s Building, 2 Ice House Street, Central, Hong Kong
info@thehenleygroup.com.hk www.thehenleygroup.com.hk
10. The Henley Outlook
June 2012
AUSTRALIA
Positives
• The Australian economy is in pretty good shape (apart from, perhaps, the wave of sackings announced recently).
Unemployment has fallen, according to the latest national statistics; the currency is strong; GDP is on trend and holding
up; there is a once-in-a-generation investment boom going on, and the government is heading back into surplus.
Negatives
• The Reserve Bank of Australia left interest rates unchanged. While it appears to retain a bias to ease, its hurdle to do
so looks higher than earlier thought, requiring a “material” weakening in the domestic economy.
• Household debt is 150% of disposable income, up from 50% 25 years ago, and has been stuck at that level for five
years. The key cause is the price of land in Australia; it is one of the least populated countries on earth yet land is
about the most expensive.
• The combination of rising population, a lack of arable land and artificial restrictions on residential development in
cities has led to a six-fold rise in the median house price since 1986, from $93,000 to $550,000 now. Over the same
period, average household incomes have risen 3.5 times.
• Other countries in Australia’s position build massive sovereign wealth funds. Australia has a relatively small one (the
Future Fund) with a specific purpose: to provide for unfunded public service pensions
HENLEY ASSESSMENT:
Negative (except the commodity sector which we like). The Australian economy is a double-edged sword: it
is expected to grow a little below trend, although the make up of the growth will be heavily tilted towards
mining investment. Key headwinds for the non-mining sectors will be 1) ongoing deleveraging by the
household sector; 2) caution by the corporate; 3) maintenance of a relatively high Australian dollar, and 4)
fiscal tightening by the authorities.
ASEAN
Positives
• Bank Negara Malaysia kept the benchmark overnight policy rate unchanged at 3%, Bank Indonesia left the rate
unchanged at 5.75%, Thailand also refrained from further rate cuts.
• Thailand’s economy unexpectedly expanded in the first quarter as factories resumed production and domestic
consumption revived after last year’s floods.
• Philippines’ electronic exports also benefited from a recovery in Thailand’s exports given their close linkage.
Negatives
• Asian nations face risks stemming from Greece’s inability to form a new government after an inconclusive election that
could deepen Europe’s debt crisis, adding to challenges from a China growth slowdown and an uneven US recovery.
• Malaysia’s overseas sales unexpectedly fell in March as manufacturers such as Unisem (M) Bhd. and Malaysian Pacific
Industries Bhd. (MPI) shipped fewer electrical and electronics products, bolstering the case for the central bank to
hold off from interest-rate increases.
Henley Assessment:
Neutral. Signs of weakening demand for Asian goods have emerged, with Malaysia, Thailand and the Philippines
all reporting export declines. Weak European demand is particularly troubling for countries including Singapore
and Thailand, where exports make up the equivalent of half or more of GDP. Fortunately, inflation is still
manageable in this circumstance, but it also imposes restriction on central banks’ policy options.
The Henley Group Limited The Henley Outlook: 10
An SFC Licensed investment adviser in Hong Kong Hong Kong, Singapore & Shanghai
Suite 2004-08, 20/F, St George’s Building, 2 Ice House Street, Central, Hong Kong
info@thehenleygroup.com.hk www.thehenleygroup.com.hk
11. The Henley Outlook
June 2012
Greater China
Positives
• People’s Bank of China (PBoC) cut reserve-rate requirement by
0.5% to 20%.
• China accelerated approvals for Qualified Foreign Institutional
Investors.
• Consumer prices in China now appear more under control. (Apr:
+3.4%).
• Despite the weak GDP growth, Taiwan is expected to enter a
stronger cyclical upturn.
Negatives
• China’s current account surplus has declined from a pre-crisis peak
of 10.1% of GDP in 2007 to 2.8% of GDP in 2011. The slowdown
in capital inflow that we have seen is likely to accelerate and the
eventual result will be the current account moving gradually into
deficit.
• China’s A-share Q1 corporate revenue up 10.4%, earnings increased
0.6%.
• Wage-based unit labour costs in China resumed their upward trend
at the fastest pace in at least a decade.
• A huge amount of off-balance-sheet debts and the shadow banking
system are two time bombs, providing a massive threat to China’s
fundamental economy.
Henley Assessment:
Neutral. The Chinese government has been uncharacteristically slow to respond to the slowdown in the
economy this spring. One of the possible reasons is the suspension of Politburo member, Bo Xilai, which may be
distracting Chinese leaders from day-to-day management of the economy. However, looking forward, if these
ongoing structural reforms – focusing on raising household income, boosting consumption and facilitating
expansion of the service sector according to the 12th 5-Year Plan – are implemented, China has the potential
for domestic consumption, rather than investment, to drive future declines in its current account surplus.
INDIA
Positives
• Extension in the income tax exemption to retirement funds under 2,700 private PF Trusts will benefit 4.6m investors
until March 31, 2013.
• Country’s central bank, the Reserve Bank of India (RBI), reduced its policy repo rate by 50bps to 8.00% for the first
time in three years.
Negatives
• India’s industrial output fell 3.5% in March YOY while manufacturing, which accounts for 76% of industrial production,
shrank 4.4%.
• Owing to deteriorating economic indicators and a slow-paced fiscal situation, Standard & Poor’s downgraded India’s
outlook to negative from stable.
• INR slumped to an all-time low of 56.50 against the USD on May 31 over growing concerns about the economic
challenges facing the country, as well as challenges from the on-going euro zone crisis.
HENLEY ASSESSMENT:
Neutral. The persistent trade deficit, the huge fiscal deficit, the implementation of General Anti-Avoidance
Rules (GAAR), tax concerns, the weak INR, the government’s inaction toward reforms and the uncertainty in
global markets pose a threat for investors in India.
The Henley Group Limited The Henley Outlook: 11
An SFC Licensed investment adviser in Hong Kong Hong Kong, Singapore & Shanghai
Suite 2004-08, 20/F, St George’s Building, 2 Ice House Street, Central, Hong Kong
info@thehenleygroup.com.hk www.thehenleygroup.com.hk
12. The Henley Outlook
June 2012
Other Emerging Markets (South Korea, Russia, Brazil)
Positives
• Brazil’s central bank lowered its inflation
forecast boosting hopes for another interest
rate cut which would also help to dampen the
strength of the currency.
• Mexico’s bolsa gained 3.1%to end the
first quarter at a record high over growing
optimism over the outlook for the local
economy.
• As the chart right illustrates, many Asian
emerging market (EM) economies, in
particular via China, Singapore and Korea, are
running very large current account surpluses
which will in turn increase their standing in
global financing in the coming years.
Negatives
• Russia, the world’s second largest exporter
of oil, is currently being hurt by signs of an
increasing oil supply in the US.
Henley Assessment:
Neutral. Whilst there have been developments in emerging markets to create their own internal markets, at
present they do still remain sensitive to a slowdown in western economies through exports. In addition, whilst
the sector as a whole has much higher forecasted growth rates and a younger, more dynamic population, any
fall out in the current sovereign debt crisis will undoubtedly affect these markets also.
The Henley Group Limited The Henley Outlook: 12
An SFC Licensed investment adviser in Hong Kong Hong Kong, Singapore & Shanghai
Suite 2004-08, 20/F, St George’s Building, 2 Ice House Street, Central, Hong Kong
info@thehenleygroup.com.hk www.thehenleygroup.com.hk
13. The Henley Outlook
June 2012
Commodities
Energy
Positives
• Iran’s nuclear ambitions remain uncertain.
• Difficult conditions on capital markets will make financing for new projects more difficult.
Negatives
• Ongoing debt concerns in Europe and signs of a slowdown in China are adding to negative sentiment.
• China’s net crude imports continues to fall.
• The Saudi’s are advocating a lower oil price.
HENLEY ASSESSMENT:
We downgrade to neutral. The situation in the Middle East remains uncertain and difficult to analyse but it
now appears that the tension between Iran and the West is easing for the timebeing. New talks are scheduled
for June in Moscow. On the macro side, the picture is not pretty with sluggish growth in the US and near
contraction in Europe. Concerns about China is also weighting on the sector. In the longer run we believe the
oil price will go up as demand grows in line with global population growth. Higher costs of production will also
provide support for a higher price.
Precious Metals
Positives
• Gold and silver are a good hedge against financial instability.
• The future of EUR is still uncertain.
• Public debt buildup on both sides of the Atlantic shows no sign of slowing.
Negatives
• Temporary USD strength puts pressure on the gold price.
• Current sentiment for precious metals is depressed.
HENLEY ASSESSMENT:
We remain strongly positive on precious metals. The market conditions for precious metals have been very
challenging over the last months and we have seen strong pullbacks in both gold and silver during May,
despite a clear deterioration of the situation in Europe following the inability of the Greek politicians to form
a government. Investors have been flocking to their traditional safe haven, the USD, which has put pressure
on gold. In our view the recent pullback in gold is normal and we fully expect gold to continue its decade long
bull run as the economic outlook for Europe in the medium term looks bleak. Gold mining shares have suffered
disproportionally and continue to represent excellent value for investors with patience and holding power.
The spread between the gold price and average cash costs is near record high, which is very encouraging for
this sector.
The Henley Group Limited The Henley Outlook: 13
An SFC Licensed investment adviser in Hong Kong Hong Kong, Singapore & Shanghai
Suite 2004-08, 20/F, St George’s Building, 2 Ice House Street, Central, Hong Kong
info@thehenleygroup.com.hk www.thehenleygroup.com.hk
14. The Henley Outlook
June 2012
Industrial Metals
Positives
• Currency debasement will support real asset prices.
Negatives
• The health of the global economy remains uncertain.
• Demand from China to soften as its economy slows down.
HENLEY ASSESSMENT:
We maintain our neutral view on base metals. Market participants remain worried about the seriousness of
the challenges facing the global economy. In the commodity sector we continue to favour other areas.
Agriculture
Positives
• UN’s Food and Agriculture Organisation
estimates there will be over 9bn mouths
to feed on the planet by 2050.
• Middle class consumers in BRIC
economies are increasingly demanding
more varied and protein-rich foods. As
affluence increases, protein from beef,
sheep, poultry, pigs, cows and fish may
in turn displace grains in diets.
• Urbanisation and life expectancy is
expected to increase.
Negatives
• Prices are subject to many
uncontrollable risks, eg, weather and
natural disasters, politics and other
pests.
Source: The Fertilizer Institute
HENLEY ASSESSMENT:
Positive: A rapidly-growing global population and the rapidly-developing emerging world underpin the long-
term prospects of the agricultural sector globally, at the same time the supply of arable land is limited.
It is estimated by the World Bank that worldwide 445m hectares of land are currently uncultivated and
available for farming, compared with about 1.5bn hectares already under cultivation. On the other hand, soft
commodity prices are subject to many factors that are difficult to forecast such as drought or flooding. We
suggest investors take a diversified approach when investing into this sector.
The Henley Group Limited The Henley Outlook: 14
An SFC Licensed investment adviser in Hong Kong Hong Kong, Singapore & Shanghai
Suite 2004-08, 20/F, St George’s Building, 2 Ice House Street, Central, Hong Kong
info@thehenleygroup.com.hk www.thehenleygroup.com.hk
15. The Henley Outlook
June 2012
Alternative Investment
Source: FRM HF report
Positives
• Specialist credit managers produced some of the best returns as managers benefitted from increased dispersion
among credits. Relative value managers also fared well as stock correlations remained at low levels.
• There is a growing expectation among market participants that the three prominent central banks (the Fed, ECB, and
BOJ) will or need to act quickly to dampen market volatility to mitigate systemic risk. Therefore, continuous liquidity
provision from central banks will definitely be a strong source of return for hedge funds.
• There have been tentative signs of a recovery in corporate activity. Given the deal flows are expected to pick up again in the
2nd half of this year, M&A arbitrage hedge fund managers should have plenty of things to do despite the macro headwinds.
Negatives
• April was a mixed month for performance across hedge fund strategies. Managers with long-term directional views
tended to suffer as a series of market trends reversed.
• On the whole, the choppy market conditions are unfavourable for medium- to long-term trend following strategies.
• Multiple sources of potential political risk indicate that the rebalancing in Europe is far from over. Political factors dominate
the market sentiment and would be deter risk-taking manager from deploying further risks on their trading book.
HENLEY ASSESSMENT:
Positive outlook: Following January and February’s head start, the euro zone bogeyman has reared his
ugly head since May, sending global markets back into a sustained decline. However, we believe market
conditions will reward those hedge fund managers well for their cautious positioning and keen focus on
capital preservation in such a volatile market environment.
GENERAL DISCLAIMER AND WARNING
The Henley Group Limited (“The Henley Group”) has produced this document for your private use only and you must not distribute it to any other person
in Hong Kong. Re-distribution or reproduction in whole or in part of this document by any means is strictly prohibited and The Henley Group accepts no
liability for the actions of third parties in this respect. Funds not authorized by the Securities and Futures Commission may involve more risk and distri-
bution or re-distribution of information relating to such funds to the public of Hong Kong may constitute an offence under the Securities and Futures
Ordinance. Notwithstanding that the information contained herein has been obtained from sources which The Henley Group believes to be reliable, The
Henley Group makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy, completeness or correctness.
The information in this document, including any expressions of opinions or estimates, should neither be relied upon nor used in any way as indication of
the future performance of any financial products, as prices of assets and currencies may go down as well as up and past performance should not be taken
as indication of future performance. Neither this document nor any information contained herein shall be construed as an offer, invitation, advertise-
ment, inducement, representation of any kind or form or any advice or recommendation to buy or sell any financial products.
The Henley Group Limited The Henley Outlook: 15
An SFC Licensed investment adviser in Hong Kong Hong Kong, Singapore & Shanghai
Suite 2004-08, 20/F, St George’s Building, 2 Ice House Street, Central, Hong Kong
info@thehenleygroup.com.hk www.thehenleygroup.com.hk