repeat the stock markets last year”s rise in stock prices? Is it worth betting on further appreciation of raw material or significant currency fluctuations? Hardly. So where does the money flow of European investors?
institutional investors this year not to be envied. Indeed, what to do now, professionals, say, insurance companies, whose work lies in the fact that profitable to invest collected from customers a lot of money? After extremely yielding 2009 exchange year, even specialists will be extremely difficult to find a long-term securities.
Risk more chance less
It is ironic, but the risk of losing on the stock exchange money this year, possibly even higher than in the past, the collapse-crisis-2009-m. After 10, 12, 14 months ago on the market was dominated by panic and fear. Therefore, many stocks and bonds is quite viable, and even first-class companies have been so absurdly cheap that they could be bold enough to put in any more or less diversified portfolio. Even if some of the selected companies did not survive the crisis, other issuers of securities as the restoration of markets sooner or later would be more than compensated for possible losses.
Actually, the way it happened, and in much more quickly than expected even avid financial optimists. An example of this - the German stock index DAX, combining the action of the 30 largest stock companies in Germany. Falling in early March last year to multi-year lows, it is less than ten months grew by more than 60 percent. So the one who at the time of clearance sale at the end of last winter was not afraid to invest in a relatively safe investment tool, as a index fund, a long time keep on last year”s warmest memories.
In the “harvest festival” involved only a few
What then to speak about those brave individuals who dare to bet on stocks of individual companies, for instance, large European banks or reputable car manufacturers, and less than a year, doubled, tripled or even quadrupled the invested capital? But do not hold it against those who too soon became a falling market, or who started to buy only if the newly rising rates: 50, 35 or even 20 per cent per annum - the same excellent results.
point, however, that the circle of participants in the “harvest festival” is very limited: brave souls in the past year proved to be quite a bit. This is evidenced, in particular, sharply reduced turnover at the leading stock exchanges of the World (on the Frankfurt stock exchange trading volumes have fallen by half!) Or, say, still a low quota of shares in investment portfolios of large insurance companies.
Rates are high, portfolios empty
As a result, we have the beginning of 2010 a very peculiar situation. On the one hand, indices and rates of many shares peaked in the last 15 months, returned to the level before the fall collapse in 2008. At the same time, most of the major players, missed last year”s profitable time to enter the market and afraid to jump in the already tronuvshiysya train is still clearly nedoinvestirovany.
This, of course, the argument in favor of the further growth of exchanges, should be the same because the same insurers, for example, once began to invest in potentially more profitable instruments than state bonds. In favor of continued rise speak and continue to record-low interest rates central banks, through which the market awash in liquidity, which largely is not in the real sector, and the stock markets.
Arguments in favor of falling rates
However, after the 60-percent increase in the index DAX and a comparable rise of its European and American counterparts reached such a height that go further up just scared. Exchanges clearly anticipated the beginning of the global economy out of recession and the beginning of economic recovery, so that now their potential for further upward movement of many seems exhausted, especially because the current economic growth can be quite volatile.
In addition, over the financial markets this year, hanging a giant sword of Damocles in the form of an imminent tightening of monetary policy. Most analysts believed that by the end of summer or fall of the U.S. Federal Reserve (Fed) and European Central Bank (ECB) certainly begin to raise interest rates. It will be a sure sign that the economy is recovering, but on the exchanges, any rise in price of credit resources traditionally cause allergic reactions.
lateral movement as the most realistic prospect
All this - the arguments in favor of falling rates. However, it is likely that any reduction in the indices have a 5-10 per cent will be seen numerous nedoinvestirovannymi professionals as a chance to still enter the market. What we get as a result? High probability of so-called lateral movement on the stock exchanges, where many indexes and rates the shares a long time varies within a relatively narrow corridor that brings the majority of investors, at best, a minimal profit.
Perhaps lateral movement threatened in 2010, not only stock but also the commodities market, where prices for oil, for example, once again reached a sufficiently high level, even though energy demand is far beyond that of the pre-crisis 2007-2008.
Currency market awaits rate increases
Maybe then make a bet on the most unpredictable market - foreign currency? He, in theory, should heat up this year coming rise in interest rates in the U.S. and the eurozone. There will be key to who will start first. Logically, it should be the Americans: they and the crisis, andreduced rates began earlier than in Europe. The first step by the Fed would be in the interests of European exporters, because it would strengthen the very cheap dollar.
However, in Washington to the danger of inflationary tendencies traditionally somewhat more relaxed than in Frankfurt, but because it is possible that the first to raise rates The European Central Bank. This can lead to extremely undesirable to further strengthen the already expensive euro. However, the current level of 1,43-1,44 dollar to the euro exchange rate will rise, probably somewhere to 1,60, but hardly more: too weak U.S. currency, no one in the world, except for a fanatical anti-American, not interested. Therefore we can assume that the Fed and the ECB will try to coordinate their actions to prevent sharp fluctuations in exchange rates, in which well-earned speculators, but which are very harmful to the economy.
Exchange returned to normal
In general, it turns out that here the lateral movement is very likely. So what, then, will invest this year”s money European investors? It used to say in the old days: he knew would be a ransom, lived in Sochi … But one thing is sure quite firmly: this year will be for stock investments is very difficult, as it is unlikely to be repeated so powerful and obvious movement up and down, as it was in 2009. In other words: time for a desperately daring cavalry assaults took place, is now promising securities for investment once again will have to seek out long and hard.
Andrew Gurkov economic commentator Deutsche Welle
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