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Johann Griener am 26th June 2015

Bond investments in the current environment

Source: iStock

After the recent, rather substantial corrections on the bond markets many investors were wondering:

“Can or should I still invest in bonds or bond funds in view of possibly rising interest rates?”

Let’s first have a look at the bonds with the highest quality within the Eurozone, i.e. German government bonds. Where have the prices of these bonds gone most recently?

In our example, we have chosen a 10Y German government bond.
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Peter Szopo am 24th June 2015

Measuring Greek risk

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The longest eleventh hour in recent history is drawing to a close. However, while the negotiations earlier this week seem to have narrowed the gap between Greece and its creditors, a final deal has not emerged yet.

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Gerhard Winzer am 19th June 2015

High noon in Greece and the trend to volatility

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Summary: The economic recovery in the developed economies is supported by the very expansive monetary policies, lower austerity pressure on the government front and among banks, and the fallen oil price. Growth rates remain moderate. In the emerging markets we can see signs of low-level stabilisation at best. The possible default of Greece, excessive interest rate hikes in the USA, a further decline of productivity, and continued economic weakening in the emerging markets are the main risks the markets are faced with.

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Paul Severin am 18th June 2015

Building industry: The jungle of sustainability certificates

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Construction is becoming sustainable: More and more buildings carry so-called “green building labels”, but only few of these certificates are transnational. Follow Erste Asset Management on its trip trough the green label jungle.

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Paul Severin am 12th June 2015

Is the Eurozone facing a turnaround in interest rates?

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Eurozone government bonds have ensured very good performance returns in the past years. The asset class has benefited from the zero interest rate policy and the very expansive monetary policy of the European Central Bank.

In recent weeks the prices of bonds from Eurozone countries have gone through a correction, above all German government bonds. The reasons for the specific timing of the correction are numerous and cannot easily be pinned down. In spite of slight improvements, we do not expect an interest rate reversal for the Eurozone at this point in time. The fundamentals for such a scenario are not in place.

Euro government bonds are an important component of a portfolio. From both risk and return considerations, a diversification across a broad spectrum of assets makes sense (e.g. by adding high-yield bonds, emerging markets bonds or equities).
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Sevda Sarp am 05th June 2015

Could the outcome of Turkish parliamentary elections lead to increased volatility?

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The upcoming parliamentary elections on Sunday in Turkey could force Erdogan to postpone his plan for a new constitution and could lead to new political leaders in the Ministry of Finance and the Ministry of Economics. This would trigger an increase in uncertainty and consequently a higher degree of volatility for the Turkish Lira and the Istanbul stock Exchange.
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Peter Szopo am 03rd June 2015

Emerging markets equities: no comeback at this point

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Based on earnings expectations emerging markets equities are currently valued 27% below the price/earnings ratio of developed markets equities. The long term average of this discount is 19%. Closing the gap is a question whether the confidence of the markets in the earnings expectations is solid enough to facilitate a re-(e)valuation.

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Gerhard Winzer am 01st June 2015

Economic Growth: Is the glass a third full or two thirds empty?

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Weak growth

Real global economic growth was weak in Q1. Estimates put economic growth at an annualised 1.5% (q/q). Thus the long-term trend of downward revisions is intact, which keeps the fears of global economy possibly heading for persistent stagnation alive.

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Paul Severin am 29th May 2015

FIFA’s corruption scandal holds reputation risk for sponsors

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The latest FIFA corruption scandal holds reputation risk for sponsors. Many sponsors continue to prioritise the advertising value over the responsible organization of events. Improvements will only happen if sponsors insist on new, transparent rules.

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Paul Severin am 28th May 2015

Who convinced us with their sustainable way of building

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Sustainable building means energy-efficient construction. Styrofoam insulation is usually the magic word, but it is a non-breathable material and can therefore lead to mold. Also, it can catch fire easily. Therefore, the German Steico Group has turned away from these materials, becoming one of the largest suppliers in the field of ecological building materials. With the use of wood fibers Steico provides an improved indoor climate. The material costs may be higher in the beginning but in the long run it will save costs. Energy and CO2 emissions can already be reduced in the production of raw materials, which is partly due to the fact that the wood used comes from sustainably managed forests.

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