Quarterly Capital Market Update

 

Country /
Asset
Influencing economic and political factors
USA
Equities Expecting poor gains till after 2014 on belated US government
austerity and in anticipation of Fed tightening.
Govt Bonds Fed loose money and government austerity maintains support,
until targeted inflation and employment levels in 2014.
UK
Equities By mid 2013, the new credible central banker’s monetary and
regulatory discipline and anemic economic growth bode ill.
Govt Bonds Following US treasury lead.
Currency Slow growth and belated austerity maintain pressure.
Eurozone
Equities ECB commitment to assist troubled nations allows small switch
in from better performers.
Govt Bonds Continued recession and ECB assistance with low interest rates
and credit lines give continued support for all nations.
Currency Continued limited recovery on risk-on trades but poor growth
and continued low interest rates will eventually weigh heavy.
Japan
Equities Manufactured currency depreciation now provides fuel.
Govt Bonds Low inflation and interest rates maintain support.
Currency Commitment to an inflationary target with low interest rates
allows overvalued currency to depreciate.
RoW
Equities After strong recover since 2008 look to take money off the
table.
Commodities Loose money supports gold, others to fair worse.

Uncertainties

  • Russian political interference in its return to
    free market
  • Chinese growing military capabilities
  • Iran
  • Necessary EU & US regulation of modern
    financial institutions and products
  • Mid-East political uncertainty.

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