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The equity bull market that no-one trusts

Equities got off to a terrible start into 2016. At the end of February, a short but intense sell-off was triggered by the emergence of concerns over a slump of the global economy in connection with China. However, since mid-February the international indices have been on the rise without any significant breaks. Not even the much-feared Brexit vote managed to dent the upswing. Although share prices were down in the immediate wake of the decision of the UK to leave the EU, they rebounded very swiftly. Read more

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Postponed is not abandoned

Bond yields were up last Friday, whereas equities recorded losses. Signs that the bull market with low volatility, which started after the Brexit vote, is drawing to an end are becoming more plentiful.

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YIELD RADAR: September 2016

In the weeks following the Brexit referendum, the prices of many asset classes were rising amid mild fluctuations. The very expansive monetary policies of the central banks are the most important reason for the price rises.

The bond purchase programme and the negative interest rate policies in the Eurozone and Japan, the expansive measures in the UK, and the wait-and-see stance taken by the US Fed have caused government bond yields to fall to very low levels; as a result, the search for yield has become more intense.

The US central bank has signalled an increasing willingness to raise rates. From todays point of view a rate hike in December is possible. For the ECB we expect a continuation of its waitand-see stance.

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Increasing volatility expected

In the weeks following the Brexit referendum, the prices of many asset classes were rising amid mild fluctuations. However, an increasing number of clues suggest higher fluctuation for the coming months.

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Growing significance of real estate shares on the stock

Real estate has been in high demand from investors for a while. The keen interest in “concrete gold” has also moved the shares of real estate companies into the limelight of investors.

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Spotlight on: corporate bonds

ESPA RESERVE CORPORATE: 3 questions for Bernd Stampfl, fund manager.

 

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Global equities – A fragile rally

The Brexit-vote was a non-event, it seems. At least, that is what global equity markets are telling us. Since June 24 – the day after the referendum – US, European and Japanese indices all have gained around 10% in local currencies (up to August 19). Emerging Markets, on average, made a similar move as well. Whether the rally will continue depends on a number of factors, pointing in opposing directions. While the fundamental backdrop suggests remaining cautious and also valuation is not supportive, low bond yields and economic policy will likely continue to provide tailwinds for global equity markets.

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Emerging markets bonds: “Responsibility and growth are not mutually exclusive”

The global, sustainable corporate bond fund ERSTE RESPONSIBLE BOND EMERGING CORPORATE has clearly passed the threshold of EUR 100mn of assets under management. A perfect occasion to take stock. Christian Schön, member of the board of directors of Erste Asset Management, explains what role sustainable investments play in emerging markets, especially in the corporate bond segment.

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Brazil: Hope for change stimulates bonds

Author: Felix Dornaus, Senior Fund Manager Emerging Markets Bonds

Felix Dornaus, Senior Fund Manager Emerging Markets Bonds
Felix Dornaus, Senior Fund Manager Emerging Markets Bonds
Brazil tactically overweighted at the moment

Most of the fundamental economic data are currently not good. In 2016, the country is in recession; for 2017, a minor growth rate of +0.7% is expected. The nominal budget deficit of 2016 is about -10%, with a primary deficit of -2.7%. This comes as a surprise, given that investors had been used to primary surpluses from Brazil. The current account is also slightly in deficit. The only silver lining is the low foreign government debt of less than 20% of GDP, accompanied by high foreign exchange reserves. We therefore do not expect any issues for bondholders with regard to the payments they are due.

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Brazilian equities are in demand

gabriela-tintiGuest Author: Gabriela Tinti, Senior Fund Manager Equities Emerging Markets

Brazil is locked into a severe recession in 2016, the year of the Olympic Games in Rio de Janeiro. After negative growth of 2.5% last year, the economy will be shrinking by more than 3% in 2016. Political crises and corruption scandals in connection with the oil company Petrobras have badly affected the country. But still, the country, shaken by crisis, is in strong demand from investors.

The importance of Brazil has declined

Especially in the equity segment, the relevance of Brazil has declined in recent years. A few years ago the BRIC economies (Brazil, Russia, India, and China) were hugely popular among investors. Mismanagement and the unfavourable development of international commodity exchanges have eaten into the weighting of Brazil in the global …

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