Bull movement – Update from the Investment Division

Bull movement – Update from the Investment Division
Bull movement – Update from the Investment Division
(c) unsplash
Share post:

What has occurred since yesterday ?

Bull movement. Prices of risky asset classes, e.g. equity increased. Of course the question remains if it is just a short, technical upward spurt or a stable base.

The reason for the better mood in the market is the agreement in the USA on a USD 2000 billion stimulus package. The formal approval of Congress is still needed, but hopefully just a formality.

Just the fact that this package was agreed upon underlines the severity of the crisis. The difference of opinion between the Democratic and the Republican parties over the last years has led to political gridlock. The announcement of the details to the agreement are still to come. However, elements e.g. a longer time period to receive unemployment benefits, loan guarantees and direct support payments seem to be included.

Large support packages are indeed necessary. The economic data over the next months will be very negative. Yesterday important economic early indicators for the month of March were published. The so called PMI (Purchase Manager Index) for important economies like Japan, Germany and the USA plunged as expected. The economic indicators for China dropped strongly already in February. The total of indicators show a strong sign that a global recession has started already in February 2020.

When will the recession end?

There is one decisive factor: the loosening of the containment measures. To guarantee that the decline in economic activity will be significant, but at the same time also short large support packages from the central banks and fiscal stimulus packages from the finance ministers are necessary.

The confidence for a bottoming out has somewhat increased. The uncertainties remain on an elevated level. The core strategy for our portfolios was to keep a certain cash quota, but to stay invested to a certain degree. Not only equity were under pressure until recently.

But also prices of investment grad government bonds experience strong volatility. The market liquidity was low. We see first signs of a stabilization.

Our dossier on coronavirus with analyses: https://blog.en.erste-am.com/dossier/coronavirus/


Legal note:
Prognoses are no reliable indicator for future performance.



Legal disclaimer

This document is an advertisement. Unless indicated otherwise, source: Erste Asset Management GmbH. Our languages of communication are German and English.

The prospectus for UCITS (including any amendments) is published in accordance with the provisions of the InvFG 2011 in the currently amended version. Information for Investors pursuant to § 21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH pursuant to the provisions of the AIFMG in connection with the InvFG 2011. The fund prospectus, Information for Investors pursuant to § 21 AIFMG, and the Key Information Document can be viewed in their latest versions at the web site www.erste-am.com within the section mandatory publications or obtained in their latest versions free of charge from the domicile of the management company and the domicile of the custodian bank. The exact date of the most recent publication of the fund prospectus, the languages in which the Key Information Document is available, and any additional locations where the documents can be obtained can be viewed on the web site www.erste-am.com. A summary of investor rights is available in German and English on the website www.erste-am.com/investor-rights as well as at the domicile of the management company.

The management company can decide to revoke the arrangements it has made for the distribution of unit certificates abroad, taking into account the regulatory requirements.

Detailed information on the risks potentially associated with the investment can be found in the fund prospectus or Information for investors pursuant to § 21 AIFMG of the respective fund. If the fund currency is a currency other than the investor's home currency, changes in the corresponding exchange rate may have a positive or negative impact on the value of his investment and the amount of the costs incurred in the fund - converted into his home currency.

This document serves as additional information for our investors and is based on the knowledge of the staff responsible for preparing it at the time of preparation. Our analyses and conclusions are general in nature and do not take into account the individual needs of our investors in terms of earnings, taxation, and risk appetite. Past performance is not a reliable indicator of the future performance of a fund.

Leave a comment Required fields are marked with *

Your email address will not be published. Required fields are marked *