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Report: safe assets back to the yard the most attractive investments
January 11, 2015 14:30 Last Updated: January 11, 2015 14:30
Kuwait - directly: in the weekly analysis of emerging markets in Asia Asia Investment Company said that most asset classes performance was positive during the first three quarters of 2014, in line with the trend growth since the financial crisis in 2008.
The report which was obtained by "direct" a copy of it and said that most of the stock markets also achieved positive returns in this period, and the Gulf region at the forefront of performance, as Dubai's shares rose more than 50%. US and European stocks and shares also achieved positive performance of emerging Asia.
At the same time, the demand for the safest asset class has increased. Reflected in lower yields on sovereign bonds of the economies of the safest, such as extending the 10-year US and German bonds, which saw a decline in revenue by 15% to US bonds and 50% of German bonds.
In addition, the US dollar index, which compares the dollar to a basket of major currencies, increased by 7% during the same period increased. Usually, the performance of each of these categories will be the opposite. The reason is the rise in prices in both safe and risky categories risks to the large inflow of liquidity pumped by the US Federal Reserve, the Japanese central bank, the Bank of England, and also to some extent the European Central Bank.
But this trend changed in the last three months of last year, while the safe asset classes achieved positive performance continued, American and German government bond prices rose and the same size as the height of the previous three quarters of 2014, and applies to the US Dollar Index. On the other hand, was the most dangerous investment performance below the level, a case of the Spanish and Italian stock markets, which fell by 10%, and also the German-yielding emerging Asia, which were negative. The US stock market profits are low, and the GCC stock markets witnessed the worst decline in the level, such as the Dubai stock market, which fell by 30%.
The reasons for the change in asset performance last credited variety of 2014. In the Gulf region, the markets have been affected due to the sharp decline in oil prices, which fell by about half of what it was in the middle of 2014. Since 2008, the economic fundamentals were not supportive of the high prices of the assets, but investors' confidence also declined in recent months. Further on, the crisis has affected the geo-political in Ukraine and the Middle East, and the recession in Russia, and the downturn in the euro zone, and the expectations of a rate hike in the United States and the United Kingdom, on the global market environment.
Other factors are also expected to negatively affect the markets, the upcoming elections in Greece, which increases the sovereign risk in Greece and also in the European Union, where investors are usually looking to secure investments in such asset class.
The report says that, as market conditions deteriorate at the present time, it is not certain that the demand for risky assets in the short term is improving, but it is likely to grow demand for assets that pose less risk, like asking the American and German sovereign bonds. In the case of the United States, may enter government bonds last year of positive performance by the US Federal Reserve applied the projected increase in the interest rate.
The German government bonds, is expected to be more attractive to investors despite revenues that do not exceed 0.5% compared to 2% returns on US government bonds. It is also expected that the development of the current downturn in the euro area is changing in the near term, particularly with the aspirations of the oil market this year, which has been supported by the European Central Bank's decision to buy bonds.
Of safe assets also the Japanese yen and Swiss franc falls, but very light policies adopted by the Japanese central bank reduced the value of the Japanese currency, the Swiss National Bank intervention in the currency, may hinder possible investments in these assets.
Of other assets that attract the attention of investors is gold. With the performance of the gold was not level in the last two years, to the low price of gold and the lack of investment alternatives began to attract new investors to gold, which has seen in the last two weeks, the longest period of continuous gains since October of last year. But the appreciation of the US dollar will encourage investors from foreign currency holders on investment, while the low inflation rate in the world would negatively affect the possibility of assets in hedge against inflation. So the possession of assets in US dollars or the currency pegged to the dollar may give investors more protection.
It is expected to continue to decline in world market prices, which makes investing in safe assets is the most important investment option this year.
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January 11, 2015 14:30 Last Updated: January 11, 2015 14:30
Kuwait - directly: in the weekly analysis of emerging markets in Asia Asia Investment Company said that most asset classes performance was positive during the first three quarters of 2014, in line with the trend growth since the financial crisis in 2008.
The report which was obtained by "direct" a copy of it and said that most of the stock markets also achieved positive returns in this period, and the Gulf region at the forefront of performance, as Dubai's shares rose more than 50%. US and European stocks and shares also achieved positive performance of emerging Asia.
At the same time, the demand for the safest asset class has increased. Reflected in lower yields on sovereign bonds of the economies of the safest, such as extending the 10-year US and German bonds, which saw a decline in revenue by 15% to US bonds and 50% of German bonds.
In addition, the US dollar index, which compares the dollar to a basket of major currencies, increased by 7% during the same period increased. Usually, the performance of each of these categories will be the opposite. The reason is the rise in prices in both safe and risky categories risks to the large inflow of liquidity pumped by the US Federal Reserve, the Japanese central bank, the Bank of England, and also to some extent the European Central Bank.
But this trend changed in the last three months of last year, while the safe asset classes achieved positive performance continued, American and German government bond prices rose and the same size as the height of the previous three quarters of 2014, and applies to the US Dollar Index. On the other hand, was the most dangerous investment performance below the level, a case of the Spanish and Italian stock markets, which fell by 10%, and also the German-yielding emerging Asia, which were negative. The US stock market profits are low, and the GCC stock markets witnessed the worst decline in the level, such as the Dubai stock market, which fell by 30%.
The reasons for the change in asset performance last credited variety of 2014. In the Gulf region, the markets have been affected due to the sharp decline in oil prices, which fell by about half of what it was in the middle of 2014. Since 2008, the economic fundamentals were not supportive of the high prices of the assets, but investors' confidence also declined in recent months. Further on, the crisis has affected the geo-political in Ukraine and the Middle East, and the recession in Russia, and the downturn in the euro zone, and the expectations of a rate hike in the United States and the United Kingdom, on the global market environment.
Other factors are also expected to negatively affect the markets, the upcoming elections in Greece, which increases the sovereign risk in Greece and also in the European Union, where investors are usually looking to secure investments in such asset class.
The report says that, as market conditions deteriorate at the present time, it is not certain that the demand for risky assets in the short term is improving, but it is likely to grow demand for assets that pose less risk, like asking the American and German sovereign bonds. In the case of the United States, may enter government bonds last year of positive performance by the US Federal Reserve applied the projected increase in the interest rate.
The German government bonds, is expected to be more attractive to investors despite revenues that do not exceed 0.5% compared to 2% returns on US government bonds. It is also expected that the development of the current downturn in the euro area is changing in the near term, particularly with the aspirations of the oil market this year, which has been supported by the European Central Bank's decision to buy bonds.
Of safe assets also the Japanese yen and Swiss franc falls, but very light policies adopted by the Japanese central bank reduced the value of the Japanese currency, the Swiss National Bank intervention in the currency, may hinder possible investments in these assets.
Of other assets that attract the attention of investors is gold. With the performance of the gold was not level in the last two years, to the low price of gold and the lack of investment alternatives began to attract new investors to gold, which has seen in the last two weeks, the longest period of continuous gains since October of last year. But the appreciation of the US dollar will encourage investors from foreign currency holders on investment, while the low inflation rate in the world would negatively affect the possibility of assets in hedge against inflation. So the possession of assets in US dollars or the currency pegged to the dollar may give investors more protection.
It is expected to continue to decline in world market prices, which makes investing in safe assets is the most important investment option this year.
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