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Steering a course between risks and opportunities

3 March 2016, Eventail

Written by Michel Visart

Since last year, movements in the financial markets have been anything but smooth sailing. There have been major jolts, a high level of nervousness and an unstable international background – all of which are factors that have quelled any optimism. Having said that, when the fund managers met, as they do every year for the Eventail round table event sponsored by Macstrat, they were fairly positive – while at the same time emphasising the moderately high level of risk. And as is always the case when times are difficult, not all opinions were necessarily in the same side. Find out who said what at the end of January in this report.

[…]

Justified nervousness

“Another factor that has prompted volatility,” notes Charles de Saligny for Wealtheon, “is the fact that the central banks have injected an enormous amount of money. And all of a sudden, movements of capital between the asset classes have become increasingly large. But there are more fundamental elements beyond these technical factors. In the United States for example, the industrial production indicators have been contracting for a number of months now. We have already mentioned China many times and there is also the case of Saudi Arabia. But alongside that, there are some fairly positive indicators, such as US real estate, or unemployment both in the United States and Europe. Against a background of very weak growth, all this is generating nervousness – and combined with items of breaking news come comments about good weeks and then less good ones. Which is why, in the end, there is uncertainty pretty much across the board.”

[…]

Equities still in favour

“We are moderately positive about equities,” explains Wealtheon’s Charles de Saligny. “On the other hand, we are overexposed to the American market at 50%, with a dollar that could reach parity, 30% to Europe, a little to Japan and then to the listed real estate market. In terms of being sector-specific, we are being very selective by excluding everything that is energy or basic commodities, even from emerging countries. We are into the sectors of consumer durables, non-durables and pharmaceuticals. And we mustn’t forget that 70% of growth is generated by private consumption.”

[…]


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