Commodity prices have fallen drastically since the beginning of July. The commodity price index provided by Bloomberg has fallen by nearly 12%. In fact, many commodity prices are locked in a bear market. The index is currently almost 50% below the level of the beginning of 2011.
Over the same period the currencies of emerging countries have depreciated by about 35% vis-à-vis the US dollar, and equities have fallen by about 26%.
In line with these developments, real economic growth in the emerging countries has weakened significantly. The growth estimate for Q2 has been cut to only 2.5% q/q. Net of the Chinese economic growth, the remaining emerging economies (accounting for about two thirds) have even shrunk on aggregate. Industrial production has stagnated in the first half of the year, and both exports and export prices have fallen.
The most recent leading indicators also suggest that there is no end in sight for the downward trend. For example, the purchasing managers index for the manufacturing sector, as compiled by Markit, continued to fall in July. While at 49.1 it is currently only slightly below the threshold of 50, which indicates neither decline nor increase, the trend is headed downwards.
In our portfolios we take this development into account and have reduced emerging markets corporate bonds to zero.
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The prospectus for UCITS (including any amendments) is published in Amtsblatt zur Wiener Zeitung in accordance with the provisions of the InvFG 2011 in the currently amended version. The simplified prospectus is prepared by ERSTE Immobilien Kapitalanlagegesellschaft m.b.H. and published in Amtsblatt zur Wiener Zeitung in accordance with the provisions of the ImmoInvFG 2003 as amended. Information for Investors pursuant to § 21 AIFMG is prepared for the alternative investment funds (AIF) administered by ERSTE-SPARINVEST Kapitalanlagegesellschaft m.b.H., Erste Asset Management GmbH and for ERSTE Immobilien Kapitalanlagegesellschaft m.b.H. pursuant to the provisions of the AIFMG in connection with the InvFG 2011.
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