Key: |
Positive  |
Neutral  |
Negative  |
Market |
Positives |
Negatives |
Outlook |
View |
U.K. EQUITIES |
Market offers reasonable value
Strong balance sheets
UK market buoyed by improving US economy |
Weak consumer and banking sector remains
Peripheral European cashflow problems looming China slowdown concerns |
Outlook is cautiously optimistic
Corporate
sector in good
shape
Eurozone policy response continues to be key
|
|
U.K. BONDS |
Gilts a safe haven from concerns about the eurozone
Inflation continuing to fall
Bank of England buying large amounts for Quantitive Easing (QE)
Short term rates likely to stay low for some time |
Heavy gilt issues to fund large government deficit
Lowest gilt yields for 60 years
|
Outlook is neutral. There are significant positive and negative factors to consider
Key issue will be whether Bank of England extends QE |
|
EUROPEAN EQUITIES |
Corporate balance sheets remain strong
Valuations low |
Government deficits a drag
Stress in Spain, Ireland, Greece and Portugal
Growth continues to be stifled |
Export markets are still stronger than domestic markets
Sovereign debt levels problematic
Although stocks are cheap, growth forecasts are negative |
|
U.S. EQUITIES |
Corporate sector is still very strong
Fed remains aggressive |
Some concern about sustainability of growth
High unemployment also a concern |
US economy is in better shape than 6 months ago
Markets will be driven by US economy
Risks to growth remain
|
|
ASIA PACIFIC EX JAPAN EQUITIES |
Strong corporate balance sheets remain
Region has better economic fundamentals than developed economies
|
Economic growth to slow moderately
Chinese policies opaque at the moment |
Exports to start to recover
Chinese growth to be boosted once new leadership appointed
|
|
JAPANESE EQUITIES |
Stronger corporate and consumer balance sheets than other economies
Valuations in attractive territory
Supportive fiscal and monetary stimulus expected |
Earnings at exporters remain dependent on a continued global economic recovery, the health of which remains a risk
|
Domestic economy is firm, giving us a positive outlook for the region
Government rebuilding programmes supportive of growth
Sensitive to the global economic growth environment
|
|
U.K. COMMERCIAL PROPERTY |
Property income yields remain high compared to UK equities and gilts
UK Interest rates and government gilts to remain low, underpinning the pricing of prime long dated property income |
Rents under downward pressure with the exception of Central London
Secondary product will continue to see capital loss |
Lack of available finance limiting market activity
Low economic growth curtails business investment
With a negative outlook for capital values, we foresee lower levels of total return for this year, however we expect returns to remain positive |
|
