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Will 2014 still be the year for equities?

4 March 2014, Eventail

As it does each year, l'Eventail has brought together for its readers the best managers from the various banks and institutions that are setting the tone on the Belgian market. Rather than examine the past, this round table set out the main lines to be followed over the coming months with one big question in mind: will performances on the stock markets be as good in 2014 as they were in 2013? While the consensus remained positive on equities, it should be noted that there were many nuances on offer, indicating that asset managers this year will have to be more accurate in what they do to achieve good results. With one constant: we need to revisit the concept of risk if we want to make sure our portfolios return a yield.

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Activist shareholders

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“In terms of the allocation of equities, we are overexposed in the United States,” explains Charles de Saligny from Wealtheon. “This is true to a lesser extent in Europe, Japan and only slightly in Asia-Pacific, especially in Australia with mining stocks. Interest for the United States comes particularly from household consumption, which represents approximately three-quarters of GDP. This is linked in part to a wealth effect on the real estate market, which has improved significantly and is pushing households to consume. Then, still in the United States, the finance sector has cleaned up its balance sheets. With regard to Europe, we are still asking ourselves whether or not we have emerged from the crisis. This is certainly the case for the stronger countries, but considerably less so for the countries in the south. There is 26% unemployment in Spain, while in Italy, the deficits are compromising growth. At a sector level, we are counting more on cyclical stocks, such as miners, consumer durables and technologies. We are stock-picking in each sector.”

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Will bonds produce a return?

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The opposite position for Charles de Saligny from Wealtheon, which is limiting risk-taking on the bonds considered to be the bedrock of the portfolio. “This means bonds have to be selected based on their good ratings. This eliminates the peripheral countries. However, there may be some yield to be had from small corporates.”

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Macroeconomics

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