Union Bancaire Privée's outlook for 2011
'Owner or lender?'
Will it be better to invest in equities or bonds in 2011? Growth prospects in emerging countries are strong and the US economy is improving gradually, so, coupled with the renewed monetary stimulus, we have a positive outlook for financial assets, especially equities. This combination should favour shareholders over debt holders in 2011. We expect a gradual economic recovery in the G7, but Pandora's box may have been opened, letting loose risks upon the world.
Asian and emerging countries to lead sustained growth in 2011
According to the macroeconomic analysis of Patrice Gautry, UBP's Chief Economist, Asia will remain the world's most dynamic economic region. A structural growth trend is in place in emerging countries, underpinned by domestic consumption and investment. Although long-lasting adjustments are likely to hold back the G7 economies, loose financial conditions should support a progressive recovery in credit and restore a more consistent trend in consumer spending. Three countries continue to appear as regional champions in terms of their contribution to world GDP and exports, namely the United States, Germany and China.
In the midst of this gradual recovery, 2011 should see a stronger, but lop-sided economic world. "The global economy remains unbalanced, with a string of recurrent crisis. Economic policy will be a major source of risk in 2011 and should be less synchronised than in the past", said Patrice Gautry. Central banks have opened Pandora's box, unleashing risks upon the world economy. He continued, "As we emerge from the financial crisis, the economy is drawing strength from the corporate world."
Investment strategy: monetary policies should favour equities
UBP's investment strategy takes into account the prevailing major economic trends and reflects budgetary and monetary policies. Christophe Bernard, Head of Investment Strategy at UBP, advocates being a shareholder instead of a debt holder, as long as monetary policy remains accommodative and corporate margins high. He recommends focusing on global firms with strong brands, high sustainable returns and exposure to emerging markets.
Emerging markets have rebounded and continue to benefit from large inflows and sustained economic growth. "UBP's preferred emerging markets are Russia and China, and we also recommend keeping a strategic exposure to emerging debt denominated in local currencies" said Christophe Bernard. He added, "We favour the energy and financial sectors, and real assets over nominal assets, with our preferred commodities being oil, copper and platinum."
About Union Bancaire Privée
Union Bancaire Privée, UBP SA (UBP) is based in Geneva and is one of Switzerland's leading private banks. Active in the field of asset management for both private and institutional clients and with a very solid balance sheet, the Bank had some CHF 65 billion (USD 69 billion) in assets under management as at 31 December 2010. UBP employs some 1,200 people in over 20 locations worldwide and provides a complete range of innovative investment products and services, both in traditional and alternative asset management, with the aim of achieving a high performance and protecting clients' capital. www.ubpbank.com
Head of Corporate Communications