IIp29-30_0709.qxd 24/7/09 18:03 Page 3
Market research | 29
Market research
from Internaxx
July 2009
This section is brought to you by the Luxembourg
based online broker Internaxx. Market analysis is
provided by Fortis Investments, the asset
management arm of the BNP Paribas Fortis group.
Mixed macro data puts equity rally on hold
(source: Fortis Investments)
W
hile most manufacturing Unemployment in the eurozone increased to While commodities have fallen since mid-June,
and trade data have 9.5% in May. The increase has been particularly we are taking the opportunity to increase our
bounced from extremely steep since September 2008, leaving consumers overweight based on a near-term favourable
depressed levels, cautious. Retail sales declined in May and while outlook for global manufacturing in general
consumer and labour the eurozone savings rate is sufficiently high and for China and other emerging markets in
market data remained that consumers have the funds to drag the particular. In case of a global recovery, capacity
generally poor. Markets economy out of recession, they are unlikely to constraints may develop as many investment
have taken notice and the equity market rally do so for now. projects in the commodity sector have been
has stalled. Data from Asia was mixed. Japanese machinery delayed or even cancelled.
In the US, a company survey showed that orders fell in May as sliding profits forced Our neutral allocation to equities remains
467,000 jobs were scrapped in June while the companies to cut spending on plants and unchanged. Within equities, we favour
labour force shrunk by 155,000 people for a net equipment. But the composite leading index emerging markets, are neutral on European
218,000 increase in the number of unemployed, improved for a second month though the level equities and underweight in the US and Japan.
the smallest increase since September last year. of the index is still very low. Trade data from We funded the increased overweight in
Indeed, unemployment only rose by 0.1%. Taiwan came in slightly above expectations, but commodities by selling inflation-linked bonds.
However, average weekly hours worked fell, those from Malaysia disappointed. Compared As a result, we are currently underweight in
indicating that companies are also cutting with levels seen a year ago, these are terrible, bonds.
hours. In the event of an economic upturn they but in the past few months the data has
will likely expand hours first, suggesting that the bottomed out. Recovery for property securities in sight
recovery may be a jobless one, which would Global equities gained 21.2% in the second (source: Fortis Investments)
translate into suppressed consumer demand. quarter, the best gain on record. Developed
On a more positive note, the ISM non- equities rose by 19.7% while emerging equities Though the short term is not without risks, the
manufacturing index rose to 47, the third surged by 33.6%. We expect that emerging worst of the sell-off is behind us, according to
straight improvement and the highest it has markets will continue to outperform as they are Fortis Investments’ half-year Global Property
been since the near-collapse of the financial set to benefit the most from the resumption in Outlook. “Property markets have stabilised
system last fall. global trade and manufacturing. somewhat in the first half of 2009 and short
www.investmentinternational.com July/August 2009 Investment International
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