Erste Asset Management - Blog

Harald Egger

Harald Egger is Chief Analyst and has worked at Erste Asset Management since 2001. Previously he worked for four years as a fund manager and analyst for AXA Investment Management in London. He headed the equity segment within Erste Asset Management and was CIO until April 2013. He has been employed in the finance industry since 1992.

Harald Eggers Posts
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Harald Egger am 19th July 2016

Japanese stock exchanges rally after Prime Minister wins elections

The Japanese equity market has been among the weakest ones in the year to date. At -15% (as of 12 July 2016; source: Bloomberg), the Nikkei index is one of the worst performers. For euro investors, the bottom line is not as abysmal: adjusting the loss for the development of the Japanese yen vis-à-vis the euro, the performance improves to -4% (Bloomberg). In spite of the negative sign, the net result still outperforms European equities.

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Harald Egger am 31st May 2016

How stock ratios can help build a sector-strategy portfolio (part 2)

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In the first part of our sector analysis we explained and examined numerous stock ratios. In this part, we want to have a look at how these ratios can inform strategic considerations and what insights can be gained for the composition of an attractive sector-strategy portfolio.

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Harald Egger am 20th May 2016

What ratios are relevant in the selection of equity sectors?

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Shares (equities) are classified, among other criteria, according to sectors, e.g. healthcare, consumer goods, energy etc. Shareholders pursue different approaches when it comes to the classification process. In this report we follow the methodology of MSCI, a US financial service provider that offers international equity indices and risk analyses.
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Harald Egger am 17th March 2016

Value versus Growth: Which investment approach to choose?

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Everybody who has read academic literature on the performance of shares will know about the fact that value shares (and small cap shares) outperform so-called growth shares in the long run.

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Harald Egger am 09th February 2016

Current earnings development advises caution

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The international stock exchanges recorded a rather dismal start into the new year. The reasons cited most frequently were China and the declining oil price. A weaker Chinese economy will definitely register also on an international scale due to the mere size of the country. While a weaker oil price is beneficial to consumers, it does cause significant levels of stress in the energy sector as well as among banks that provide credit to the sector.

A factor that has hitherto been more or less disregarded is the general earnings situation of listed companies. Therefore we want to take a closer look at this topic in this article. Without earnings growth, there can be no sustainable rise in share prices.

Earnings cycle has peaked out

In the developed markets equity universe the earnings cycle peaked out in February 2015. Since then, earnings have been on a slow but steady decline.

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Harald Egger am 15th July 2015

When will the earnings momentum rise on the European equity markets?

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The stock exchanges have been moving sideways and down for weeks. There are of course enough uncertainty factors such as the Greek crisis, the correction on the Chinese stock exchange, and the expected interest rate increase in the USA that can serve as explanation. However, one factor that has (so far) been left out of the equation is the fact that company earnings are hardly growing. The increase on stock exchanges is fundamentally justified if the valuation levels are rising across the board without earnings growth (e.g. price rises due to the low interest rates) or if company earnings themselves are rising (thus justifying the valuations). The interest rates can actually not fall any further, which means that the stock exchanges cannot get any impulse from that end.

How does the other factor, earnings growth, look? There is no clear answer to that question. Some market participants are rather sceptical. In the following I will try to shed some light on these factors, company earnings and earnings momentum.

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Harald Egger am 05th March 2015

European shares – is it still time to get in on this one, or has the ship sailed?

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We have seen European equities outperform their American peers in the year to date, both in local currency and in euro. Not even the increase of the US dollar relative to the euro of 8% made a difference to that. What is this pro-European optimism based on? After all, the US economy has seen a significantly better development than the Eurozone. The same is true for US companies, which have been recording profit growth, as opposed to Europe, where profits have generally been falling recently. The uncertainties in Greece and Ukraine only add to this scenario.

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