Peter Sartori

The recent turbulence in markets is resulting from several non-economic factors, such as the Ebola outbreak, sanctions imposed on Russia related to the ongoing turmoil in Ukraine, and plummeting oil prices as Saudi Arabia maintains its high oil production, according to new research by Nikko Asset Management. The Tokyo-based firm nevertheless expects risk markets to withstand the events and continue their upward march.

“Our target for the S&P 500 is a slight rise above its recent level and continues to look quite achievable once some of the panic surrounding these issues calms,” said John F. Vail, chief global strategist and chairman of the firm’s global investment committee.

Meanwhile, in the Asian region, relatively stable political regimes are translating into meaningful economic gains in certain countries, according to Peter Sartori, the head of Asian equity based in Singapore.

“Asia’s moment is now for the taking, and the next 12-24 months will be critical for shaping investors’ image from one of a perpetually emerging Asia into one that has finally emerged,” Sartori said. “Indisputably, sound political systems are crucial for economic development and progress.”

The firm’s analysts point out that Singapore, which has had a single political party in power over a prolonged period of time, has seen its economic growth contract in only five short periods over the last 53 years. The Philippines and Indonesia, too, managed to carve out an enviable sustained economic growth path over long periods where political power was absolute.

China’s economic transformation within its ongoing communist political structure has allowed the country to become the world’s second-largest economy in the short space of 36 years. Its new leader, Xi Jin Ping, is the only person to concurrently hold the highest office of the party, state and military, within his first term in office. “He moved quickly to eliminate corruption, leaving virtually no office untouched,” Sartori said. “China bears should be afraid, especially as the market has been marking a bottom for the last two years; still a substantial 60 percent from the high point reached in 2007.

India, on the other hand, may now be poised to join the ranks of more politically stable countries, thanks to the Bharatiya Janata Party’s resounding general election win in May, the first time in 30 years that a single party secured more than 50% of the government.  “Can the BJP under Narendra Modi deliver policies that will lift the living standards of the poorest and deliver sanitation to the slums? Market expectations are high,” Sartori noted.

Elsewhere in the latest edition of Nikko Asset Management’s Evolving Markets report, the firm’s analysts note that household net financial assets in Japan (excluding real estate) reached a historical high, according to second-quarter data, of \1.29 quadrillion (US$12.6 trillion)　in Japan. The so-called “wealth effect” has been underestimated by local and foreign investors, though in other countries it is a linchpin of economic recovery: “’Asset Bubble Economics’ (ABE) is a phrase that is lightly bandied about,” Vail commented, “But the role of inflating asset prices, while keeping interest rates down, has been the hallmark of the U.S. economic recovery.”

The administration is also serious about making improvements in corporate governance as one of a series of economic stimulus policies. It is expected to start emphasising the importance of dividend payouts, congratulating those companies who raise ratios sharply and criticising those who fail, the report said.

“Foreign investors will realise that corporate governance in Japan is a very serious trend, along with the recent surge in profit margins, and gain confidence in the country,” Vail said. “The implications of this trend are huge as the impact of growing asset wealth and income for individual and institutional investors will be the key to the continuing success of Abenomics, so we expect Japan’s leadership to encourage dividends.”

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Oil prices have responded to political volatility in the Gulf.

In 1973, Egypt and Syria launched a surprise attack on Israel during the Jewish religious festival of Yom Kippur. The swift arrival of arms from the US helped Israel repel the assaults.

Opec nations, upset at US support for Israel, cut oil production and placed a sales embargo on the US and any European country that helped Washington funnel arms to Israel. Oil prices surged nearly 400% over the next 12 months in what became known as the first oil shock of 1973-74.  The result was the stagnation of the 1970s.[1]

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• Global share markets mostly rose over the last week helped by indications from the Fed that it’s still in no hurry to raise interest rates, expectations that the ECB might have to provide more stimulus, the Scottish No vote removing risks over UK assets and the continuing slide in the Yen to a six year low providing a boost to Japanese shares. Chinese shares fell but only slightly thanks to signs of monetary easing. The combination of poor Chinese economic data and the falling $A weighed heavily on the Australian share market as foreign investors tend to retreat to the sidelines whenever the $A is under threat.  Bond yields were little changed but the $US continued its ascent which in turn saw the Australian dollar remain under pressure and falling below $US0.90.
• The US Federal Reserve provided no surprises with another $US10bn taper to its QE program leaving it on track to end next month and an ongoing assessment that considerable labour market slack remains and that a “considerable time” is likely to elapse between the end of QE and the first rate hike. However, the Fed is incrementally continuing to become less dovish with Fed officials’ “dot plot” of interest rate expectations getting revised up slightly and Janet Yellen highlighting that the timing of the first rate hike is dependent on how the economy performs. Our assessment remains that the Fed can afford to take its time for now, but in the June quarter next year it will start to gradually raise rates. The anticipation and then the reality of this could cause bouts of share market volatility – particularly whenever there is a run of strong US economic data, but it’s unlikely to derail the bull market as rate hikes will be reflecting strong economic and profit conditions.  Only when interest rates reach onerous levels will there be a significant problem, but that will be a fair way off.
• Thankfully common sense prevailed in Scotland and the No vote won. This is good news for UK and Scottish assets and more broadly for the Eurozone as other pro-independence movements likely the Catalonians in Spain weren’t given the encouragement a Scottish Yes vote might have provided. Catalonia’s potential referendum for November will be the next one to watch though.
• The Ukraine crisis may be heading towards a resolution of sorts, with the Ukrainian Parliament granting a degree of autonomy to the eastern regions currently in conflict. There may still be more to go before the conflict is resolved, but with Russia describing the move as positive we may be getting to the point where Ukraine starts to recede as an issue for investment markets.
• In Australia, the minutes from the RBA’s last meeting repeated the “period of stability” mantra on interest rates but expressed more concern about the growth in investor housing credit and house prices. The RBA is stuck between a rock – in terms of the risk of accelerating house prices – and – a hard place in the form of the Australian dollar which remains too high, despite recent falls. The best approach is likely to be more jawboning to the effect that home buyers need to be cautious and that the $A remains overvalued. If the property market does not cool down a bit and the $A remains too high, I suspect that the RBA may then be tempted to go down the path of encouraging APRA to raise the risk weighting for home loans rather than start raising interest rates.
• Right now the Australian dollar is going in the right direction helped by the Fed’s gradual move towards monetary tightening. There is a bit of technical support around $US0.89 but I expect that by year end the $A will have fallen through the January low of $US0.8660 on its way to around $US0.80 over the next year or so. A lower $A will provide a shot in the arm for trade exposed sectors of the economy at a time that we need them to perk up as mining investment slows.

Major global economic events and implications

• US economic data was mostly favourable with solid growth readings but low inflation. Industrial production unexpectedly slipped in August, but strong regional manufacturing surveys point to a bounce back this month. While housing starts and permits fell this was only after a huge surge in July and a stronger than expected gain in the NAHB homebuilder index points to strength head. Finally, jobless claims fell and household net wealth rose 10% over the last year, providing a strong wealth boost. Meanwhile, inflation remains low with headline and core CPI inflation falling to 1.7% year on year in August which partly explains why the Fed is in no hurry.
• Bank take-up of the ECB’s first auction of cheap funding under its new Targeted Long Term Refinancing Operation (TLTRO) program was around half expectations at €83bn, which may partly reflect bank caution ahead of the ECB’s review of the quality of their assets. So hopefully the next auction in December will see more interest, but in the meantime it puts pressure on the ECB to quickly ramp up its quantitative easing program.
• In China a sharp fall in the MNI business indicator suggests that the growth slowdown may have continued into September and home prices continued to fall in August with average prices down just over 1% with virtually all cities seeing falls. Meanwhile, the Chinese central bank may be reacting to the growth slowdown with reports that it is providing RMB500bn to the major banks and a fall in the 14 day money market rate. While a cut to the PBOC’s 12 month benchmark interest rate would be more appropriate as Chinese interest rates remain too high for the Chinese private sector, its latest moves are welcome and highlight that the authorities are prepared to support growth.

Australian economic events and implications

• There were only secondary data releases in Australia over the last week and they were all soft. Auto sales and the Westpac leading index both fell in August and the weekly ANZ Roy Morgan consumer confidence index fell slightly.

What to watch over the next week?

• Globally, the main focus in the week ahead will be the release of September business conditions PMIs (Tuesday) in China, Europe and the US. The flash HSBC manufacturing PMI for China will be watched to see whether the latest slowdown continued into September, Eurozone PMIs are expected to remain off their previous highs and the US PMI is expected to remain strong.
• In terms of other US data, expect further gains in existing homes sales (Monday) and new home sales (Wednesday), a fall back in headline durable goods orders (Thursday) after the aircraft inspired surge seen in July but a continuing trend rise in underlying orders and another upwards revision to June quarter GDP growth (Friday) to 4.6% annualised from 4.2%.
• Japanese inflation data will be released Friday, but is being boosted by the April sales tax hike. Excluding this it’s likely to remain around 0.5% year on year on a core basis, which is better than the deflation that prevailed for a long time but still has a fair way to go to reach the 2% inflation target.
• In Australia, the RBA’s half yearly Financial Stability Review (Wednesday) is likely to indicate that the financial system remains in good shape, but express concern that the residential property market may be getting too hot and potentially posing risks for financial stability in the future if it continues to hot up. Speeches by RBA Governor Stevens (Thursday) and Assistant Governor Richards (Friday) will be watched for further comments on how the RBA sees the risks around the property market, the broader economic outlook and the $A. They are likely to reinforce the rates on hold message. Data for job vacancies will also be released.

Outlook for markets

• Shares are still at risk of occasional corrections particularly ahead of the end of US quantitative easing next month, the US mid-term elections in November and with September and October often proving volatile for shares. Australian shares are also vulnerable in the short term to further falls in the iron ore price and as foreign investors stay on the sidelines as the $A falls.
• However, occasional corrections are healthy in allowing shares to let off a bit of steam and should be seen as a buying opportunity as the cyclical bull market in shares likely has further to go. We still don’t see the signs of shares being over valued, over loved and over bought normally seen at major market tops. Valuations remain okay, global earnings are continuing to improve on the back of gradually improving economic growth, global monetary conditions are set to remain easy and there is no sign of investor euphoria.
• Our year-end target for the ASX 200 remains 5800. Although the falling $A is initially a drag for the Australian share market as foreign investors retreat to the sidelines, after a while it will start to become a source of support as it flows through to upwards revisions to earnings expectations. Roughly speaking each 10% fall in the value of the $A boosts company earnings by 3%.
•  Low bond yields will likely mean soft returns from government bonds, particularly as we continue to edge closer to the start of a gradual interest rate tightening cycle in the US.
• The combination of soft commodity prices, the likelihood the Fed will start raising interest rates ahead of the RBA and relatively high costs in Australia are expected to see the broad trend in the $A remain down. Expect to see it fall to around $US0.80 in the next year or so.

By Dr Shane Oliver, Head of Investment Strategy & Chief Economist

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Important note:While every care has been taken in the preparation of this document, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455) make no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This document has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This document is solely for the use of the party to whom it is provided.

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Nathan Lim

Australia Headlines

• Western Australia’s energy market is broken – wholesale electricity prices ($180 per megawatt hour) cost more than unsubsidised solar and wind, more than double rates in Eastern Australia
• Renewable Energy Target review delivers on preconceived conclusion – local renewable energy industry in peril

AEI Assessment

The Renewable Energy Target review lead by climate skeptic Dick Warburton has recommended changes that would effectively arrest renewable energy development in Australia. While the grandfathering option in the recommendation should provide some security for existing investments (assuming it is adopted), there is nothing to support further large scale developments. We are disappointed that the government seems to be deliberately ignoring the global trend whereby nations are reducing their emission intensity from power generation to address climate change. Support for this trend also comes from the added benefit that it also improves local air quality.

North America Headlines

• California oil refiners take in record oil-by-rail from Utah
• Colorado activists drop fracking opposition in return for new task force to address concerns regarding hydraulic fracturing
• Consolidated Edison sees nearly 100% growth in solar rooftop installation in 2013 – solar cheaper than residential electricity rate
• Democrats increasingly backing oil and gas industry
• Energy Information Administration (EIA) says imported oil to meet 22% of US demand, the lowest level since 1970
• Reinstatement of the Production Tax Credit by Congress before year end remains highly uncertain
• California, under Assembly Bill No.327, starts rulemaking process to integrate cost-effective distributed energy resources into the grid
• Department of Energy, 2013 Wind Technologies Market Report – Wind Power Purchase Agreements at record low of US$25 per megawatt hour
• California passes bill to streamline residential solar applications and installations
• Gina McCarthy, Environmental Protection Agency (EPA) head, says renewable fuel standard ruling out shortly and could be higher because of increased gasoline usage
• EPA to decide this year whether to regulate methane emission from drilling (fugitive emissions)
• FutureGen 2.0 (experimental near-zero emission coal plant) gets EPA approval for CO₂ injection wells
• EPA must rule by December 1 on Ozone standard. Tightening to 60-70 parts per billions will impact power generators through additional nitrogen oxides and volatile organic compound abatement equipment

AEI Assessment

The policy debate around shale oil and gas continues to swing towards the moderates and away from the critics. The growing realisation of its transformational impact on the economy has broadened its appeal as it seems to hold the promise of jobs, prosperity and energy security. As a result we have raised our assessment for oil to Positive.

Renewable energy support policy continues to slide but the cost of solar and wind has fallen so dramatically that financial supports are becoming decreasingly important. As noted above rooftop solar and large scale wind are now competitive in conventional energy markets. Even after deducting the benefits of various subsidies, the economics are not so drastically affected as to completely negate renewable energy’s competitive position. Scale in both technologies and sensible policy support (like California’s decision to make rooftop solar installations less bureaucratic), continues to drive cost down making renewables so close to being strongly competitive against conventional energy on an unsubsidised basis.

The EPA is signalling its strong desire to continue to improve air quality by all means possible with FutureGen now able to proceed to construction and the department’s finding that ozone levels still too high.

Europe Headlines

• UK Department of Energy and Climate Change, less than one-quarter of UK public support shale gas development
• German electricity price go negative again from high wind production
• Italy passes changes to Feed-in-Tariffs for solar, effectively a 20% retroactive cut
• European Commission expected to confirm 40% carbon emission target by 2030 in October, efficiency and renewable targets to be considered
• Ukraine and Russia moving towards a permanent ceasefire

AEI Assessment

The next major policy development for the EU is their 2030 targets. Preliminary discussions continue to suggest efficiency and renewable targets will only be binding at the EU level and not at the country level. Given the ongoing divergence in energy policy amongst member states (Poland versus everyone else essentially), this seems to be a reasonable compromise as it recognises that some countries are more willing than others to migrate to higher levels of renewable energy and take responsibility for their contribution to climate change. Countries have exceeded EU targets in the past so an aggregate target does make sense as long as there are not too many other countries looking to get a free ride. Making the efficiency target non-binding is disappointing though as these are easily the most direct and least difficult technologically to reduce a nation’s energy intensity.

A political resolution in the Ukraine, at the time of publication, appears to be in the making which will substantially reduce the political risk in this region.

China Headlines

• Beijing cuts coal consumption 7% in first six months of 2014
• Smaller cities steer away from GDP as primary performance metrics, focus on raising living standards for poor, reducing poverty and environmental protection
• 70% of Chinese coal companies losing money as coal price at seven year low
• China appeals mixed World Trade Organisation ruling on US duties levied on solar panels, wind towers
• National Development and Reform Commission says China will start national carbon trading by 2016

AEI Assessment

It is becoming abundantly clear that China has recognised that business-as-usual will further aggravate the economic, societal and environmental imbalances in the country. Bringing forward its national carbon trading market and the move away from solely using GDP as a measure of success is tacit recognition by the government that externalities cannot be ignored forever. This will continue to put downward pressure on energy intensive, high emission industries.

Japan Headlines

• Japan has added 9,770 megawatts of clean energy since July 2012 – 98% is solar
• Minister of Environment, Japan should target 30% renewables by 2030
• Abe appoints new cabinet with the popular Yuko Obuchi tasked to push through the unpopular nuclear re-start agenda

AEI Assessment

Japan’s version of President Obama’s “all of the above” energy policy is best demonstrated by the expansion of solar power over the past two years. Over this time, Japan has approved an astonishing 65 gigawatts of new solar projects which actually exceeds Australia’s entire installed base of all forms of generation. The comment made by the Minister of Environment hardly seems necessary but is an important recognition by the government of the role of renewable energy in the energy mix. Yuko Obuchi appointment as the first female Trade and Industry Minister is hoped to appeal to the broader electorate as a recent Nikkei newspaper poll found 65% of female respondents opposed restarting Japan’s nuclear fleet.

Global Headlines

• India is considering adopting a Feed-in-Tariff regime for solar
• India proposing 10,000 megawatts of wind per year
• Brazil energy auction attracts offers of 26 gigawatts of wind, solar
• Africa to install more renewable power in 2014 than in previous 14 years
• 2,200 cellphone towers in India to be powered exclusively with solar
• India does not impose solar dumping duties
• Global solar installations on track for record for 2014, 52 gigawatts
• India’s Prime Minister Modi says good governance and clean energy are top priority

AEI Assessment

Momentum is building for an energy transformation in India and Africa. The deployment of solar cellphone towers in India is significant because it was needed to address the lack of dependable power in the area. This is a reflection of the larger problem facing the developing world where a centralised grid strategy has failed to lift nations out of energy poverty. Building a distributed energy grid around where energy is consumed instead of where resources are located is expected to be a fundamental principle in grid deployment in the developing world.

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Gold undervalued: Van Eck Global

Gold stocks are likely to rise over the next year from their current undervalued levels. Additionally merger and acquisition activity could heat up with any rise in the gold price towards US$1400 an ounce, according to Joe Foster, Portfolio Manager of Van Eck Global’s gold strategies.

Mr Foster said in a recent outlook on the gold market that while the gold price and gold stocks are off their 2013 lows, further gains in price are likely given the extent of last year’s sell-off.

“Gold stocks have done very poorly over the last several years as they have been out of favour. It’s going to take a lot to make up the lost value that has been destroyed over the last several years.  We’re in the process of recovering that value,” said Mr Foster.

“Even though gold stocks are up from 2013 levels, with some stocks up some 30% or so this year, we think they’ve got a long way to go to reach fair value. Valuations still look very attractive to us now.”

Mr Foster said several factors could help support the gold price over the coming year, which has formed a solid base around US$1200 per ounce.

“Gold continues to trade in the US$1200 per ounce to US$1400 per ounce range and we maintain our view that the price has established an important base. Fundamentally, Chinese demand is expected to increase, and lower costs of production, heightened geopolitical risk and an absence of persistent bullion exchange-traded product (ETP) selling are helping to support the gold price at current levels,” he said.

“People are worried about events in Iraq, Gaza and stability in the Middle East generally. Ukraine remains unstable. We expect these uncertainties and conflicts to continue to underpin the gold price throughout this year and next,” he said.

“In the US, financial-market and monetary policy risk remain. In the current low-growth recovery the US Government has piled up trillions of dollars of debt that looks like it is here to stay. We like to think of gold as a hedge against irresponsible policies from Washington, D.C. and possible asset bubbles or inflationary pressures, particularly,” Mr Foster said.

According to Mr Foster, M&A activity will likely rebound with any further gains in the price to US$1400 per ounce, which could positively impact Australian gold miners.

“I think M&A will continue at relatively low levels, as long as the gold price remains at current levels. If we get a move through US$1400 an ounce and we see a more positive trend in the gold market, I would expect to see M&A activity start to heat up as valuations rise and higher takeover offers are made for gold miners,” he said.

“In the first quarter, we saw a hostile takeover attempt.  This underscores  my point that the takeover target, Canadian miner Osisko, wasn’t willing to be purchased at current valuations.  The acquirer, Goldcorp, had to go hostile.

“Osisko, in the end, was taken over by a combination of two companies, Yamana and Agnico. Again, takeover activity has been at low levels because companies aren’t willing to be taken over at these low valuations as this struggle indicated,” Mr Foster said.

“We haven’t seen much on the mega-merger front in recent times because a lot of that activity has already occurred; these companies are already at a very large size. In fact, there was recent news about changes in top management at Barrick. Barrick is the largest gold company in the world and we think that they realise that this mega gold company model might not be the best way to run a gold company.

“We could see changes at Barrick that reflect what we’re talking about, the fact that some of these companies have gotten too big for their own good,” Mr Foster said.

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Weekly Economic Briefing

Standard Life’s Global Outlook Report.

With all the negative headlines coming out of the Ukraine and Middle East in recent weeks, it has been easy to forget that the global economy is actually in fairly good shape.

Helped by generally loose financial conditions, as well as pent-up demand in most developed economies after years of tepid growth, the global composite Purchasing Managers Index (PMI) held up at 55.1 in August.

That reading is a little lower than the levels recorded in June and July, but it is still the third highest outturn since the beginning of 2011. Helpfully, the global recovery is becoming less dependent on manufacturing activity to drive growth.

Whereas the global manufacturing PMI is currently at 52.6, signalling healthy though not spectacular growth, the global services PMI is sitting at 55.5, not far from a post-financial-crisis high. Taken at face value, such levels of business sentiment are consistent with above trend global output growth, although there has been a tendency for the PMIs to overstate official GDP growth in recent quarters.

While the global backdrop is undoubtedly positive, not all countries and regions are sharing in the wealth equally (see chart 1).

Among the world’s largest economies, the US and UK continue to lead the way, reinforcing our view that the Federal Reserve and Bank of England will be the first central banks to begin raising short-term interest rates.

The US in particular appears to be accelerating into the second half of the year, led by vehicle sales and business investment. Sentiment is also holding up fairly well in Japan, although it is well below the levels recorded at the beginning of the Abe revolution and the rebound from the sales tax hike has been weaker than hoped.

However, the biggest disappointment is the Euro-zone, where the recovery is in danger of petering out before it even began. The biggest drags are still France and Italy, although even German growth has moderated of late; no prizes then for guessing why the ECB announced new easing measures last week.

The BRICs remain a mixed bag. The Chinese authorities are pushing to hit their 7.5% growth target, despite the related financial risks being generated.

Meanwhile, Russia is sinking under the weight of sanctions and Brazil has fallen into recession. Indeed, only the Indian economy seems likely to accelerate in the second half of the year.

Click here to download the full report.

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• Share markets were mixed over the last week with Eurozone shares up on the ECB’s monetary easing and talk of a ceasefire in Ukraine, Japanese and Chinese shares up but US shares down partly on worries that strong data might bring forward a Fed rate hike and Australian shares down. Bond yields mostly rose, but yields in peripheral Eurozone continued to slide. The ECB easing saw the euro continue to slide with the rising $US weighing on commodity prices, but the $A remaining stubbornly strong despite a sliding iron ore price.
• ECB announces quantitative easing (QE). In response to poor growth and the rising risk of deflation the ECB eased more than expected in announcing a 0.1% cut to its official interest rate taking it to just 0.05% and that it will begin buying asset backed securities with the aim of expanding its balance sheet by €1 trillion. The ECB won’t announce the details of its asset buying program till next month, but by indicating it will include mortgage backed securities and covered bonds it has effectively allowed a much larger scale program. It’s not US style QE as the ECB will not be buying government bonds (at this stage anyway), but it will have the same effect in pumping cash into the economy, displacing investors from relatively low risk investments and forcing them to take on more risk which will lower the cost, and improve the availability, of funding throughout the economy. And its latest rate cut will lower the cost of cheap four year funding for the banks to just 0.15% pa. Will it work? It will certainly help, particularly all the talk of money printing will head of a deflationary mentality taking hold.
• Ukraine is not over yet. While there was a bit of hope regarding a possible cease fire in Ukraine, this may be Russia’s attempt to look constructive ahead of a NATO summit. At this point the two sides still look far apart and so it’s too early to get optimistic. There are essentially three scenarios worth considering for investors regarding Ukraine. First a peaceful resolution soon, which would probably see Ukraine stay out of the EU and NATO to appease Russia. Second, an escalating war between Ukraine and Russia. Third, an escalating war that draws in direct military involvement from the West led by the US and Europe. Of these: the first would be a minor positive for global share markets but would quickly be forgotten; the second would be a source of volatility but like now would only be a major issue if sanctions get ramped up, but would ultimately not derail the global economic expansion; and the third would be a major concern for the global economy and hence could see a sharp fall in share markets. However, the chance of third scenario occurring – ie direct conflict between the West and Russia occurring is very low. The West may respond with escalating sanctions and NATO sabre rattling but it’s very unlikely to engage in anything approaching direct conflict with Russia for the same reason it didn’t through the Cold War (ie Russia is a nuclear power). So we remain of the view that Ukraine will likely remain a source of uncertainty for investors (and slower growth for Europe), but it’s unlikely to derail the global economic expansion.
• In Australia, there was nothing new from the RBA which left interest rates on hold for the 13th month in a row and reiterated that a period of stability remains prudent with this message effectively backed up by a speech by Governor Stevens. Right now the uncertainty around the economic outlook and the strong $A preclude any thought of a rate hike, but by the same token signs the economy is responding to lower rates and the risk of boosting financial risk and house prices preclude rate cuts.
• Meanwhile, there seems to be lots of doom and gloom on Australia lately with talk of the economy in the “danger zone” and even ads on my iPad apps screaming “Australian recession 2014 – why it’s unavoidable…” This is way over the top! Sure the fall in commodity prices and specifically the iron ore price is a blow to national income. But thankfully lower interest rates are helping to drive a bounce back in the sectors of the economy like housing and retailing that were suppressed by the mining boom. And there is still plenty of scope for interest rates to fall further if needed and for the Australian dollar to fall, which I think it will over time, providing a shock absorber for the economy. But the real story on the Australian economy – as evident in the data seen over the last week – is that the shift back to a more balanced economy is proceeding.
• It’s been a somewhat messy week for policy making in Australia. The mining tax hit the dust, but the increase in the super levy has been delayed yet again, leaving likely super retirement savings inadequate for most workers needs and there’s talk of a fund to bailout failing companies. While the latter is nice in theory, in practice such government intervention rarely works, so hopefully the Government will reject it.

Major global economic events and implications

• US economic data was pretty solid with the ISM indexes rising to very strong levels, construction activity and auto sales rising solidly and labour market indicators remaining strong. This is all keeping alive the prospect of a Fed rate hike coming earlier than mid next year.
• In Europe, economic news was mixed with a downwards revision to August PMIs albeit to levels still consistent with modest growth but a sharp rebound in German factory orders.
• The Bank of Japan made no changes to its super stimulatory monetary easing program. But there was good news on the economic front with nominal cash wages up 2.6% over the year to July suggesting wages growth and inflationary expectations are responding to the BoJ’s campaign to end deflation.
• Chinese economic data was mixed with the manufacturing conditions PMI for August falling back a bit, but services conditions PMIs strengthening suggesting that overall growth remains okay.

Australian economic events and implications

• The avalanche of economic data in Australia over the last week painted a reasonably hopeful picture for the economy. Sure the ongoing slide in the terms of trade is a blow and growth slowed in the June quarter, but the growth slowdown was nowhere near as bad as many feared and there are clear signs of improvement in the non-mining economy. Given that the main reason for the slump in quarterly growth from 1.1% in the March quarter to 0.5% in the June quarter relates to volatility in exports and imports it makes sense to average the two quarters which gives 0.8% quarter on quarter or 3.2% annualised, which is a pretty good outcome given the circumstances. More fundamentally, July data for retail sales point to a bounce back in consumer spending growth in the current quarter, the trade deficit also improved in July suggesting that net export volumes are likely to bounce back and continued strength in building approvals points to ongoing growth in dwelling construction.
• The June quarter National Accounts also included a couple of long term positives for Australia. First, productivity growth is solid at 3.2% year on year in the market sector, which will help minimise the hit to living standards from the fall in the terms of trade. Second, the household saving rate remains strong at 9.4% indicating households have a good buffer against shocks to income and are continuing to improve their net debt position.

What to watch over the next week?

• In the US, August retail sales data (Friday) are expected to show modest growth after the disappointingly flat outcome for July. This is likely to be supported by a further lift in consumer confidence (also Friday).
• In China, the focus will be on data releases for August. Expect trade data (Monday) to show exports up 10% and imports up 4%, lending and credit data to show a bit of a bounce back after weakness seen in July, CPI inflation (Wednesday) falling back to 2.2% year on year and slight moderations in growth for retail sales, fixed asset investment and industrial production (Saturday).
• In Australia, expect ANZ job ads (Monday) to show a further trend gain, housing finance (Tuesday) to rise 1%, the NAB business confidence and conditions measures (also Tuesday) to remain around the reasonably solid levels seen in July, consumer confidence (Wednesday) to show a further slight improvement and employment to show a 10000 gain with unemployment falling back to 6.3% after July’s partly statistical spike.

Outlook for markets

• While shares have seen a strong recovery from the early August mini-slump, the correction season consistent with the old adage “sell in May, go away and come back on St Leger’s Day” is still upon us with September historically being the weakest month of the year for US shares and the September-October period often being tough in Australia.Relatively high short term optimism readings in the US also warn of the risk of a correction and there is no shortage of potential triggers including worries about the Fed and Ukraine.
• However, despite the risk of another correction the cyclical bull market in shares likely has a lot further to go as we still don’t see the signs of shares being over valued, over loved and over bought normally seen at major market tops.Valuations remain okay particularly once low interest rates and bond yields are allowed for, global earnings are continuing to improve on the back of gradually improving economic growth, monetary conditions are set to remain easy for some time and there is no sign of the euphoria that comes with major share market tops. In fact, in terms of the latter there still seems to be a lot of wariness regarding shares.
• Low bond yields, eg 10 year yields of just 0.5% in Japan and 3.4% in Australia, will likely mean soft returns from government bonds.
• The combination of soft commodity prices, the likelihood the Fed will start raising interest rates ahead of the RBA and relatively high costs in Australia are expected to see the broad trend in the $A remain down. Expect to see $US0.80 in the next few years, but getting the timing right is hard.

By Dr Shane Oliver, Head of Investment Strategy & Chief Economist, AMP Capital

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Important note:While every care has been taken in the preparation of this document, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455) make no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This document has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This document is solely for the use of the party to whom it is provided.

The post Weekly market & economic update – week ending 5 September, 2014 appeared first on AdviserVoice.

Strong positive flows were seen across the US, Europe and APAC, with Australia based ETFs receiving $368m in flows – improving on last month’s record inflow of $354m.

The increasing escalation in the Ukraine, ongoing tensions in the Middle East, Argentina’s latest default and concerns about the Federal Reserve’s intentions did not deter global ETF investors from investing heavily in equities in July. Of the US$35.5bn invested in ETFs across globe during July, 82% of these flows were to equity-based ETFs in July.

Looking a little deeper into recent trends, we can see that Emerging Market equities have seen a rapid return to favour with ETF investors adding heavily in Emerging Market equities for the 3^rd month in a row.  This follows a period of significant outflows from the asset class due to concerns around the evolving political landscape and Chinese reforms concerns.

Unlike their global peers, Australian ETF investors remained cautious on emerging market equities with cash outflows over July the largest over the last 12 months.

While global ETF investors clearly favoured the attractiveness of higher growth emerging economies in recent periods, we expect continued convergence of economic growth from advanced and Emerging Economies due to an improvement in the advanced world and a stabilisation of Emerging Economies. Our expectations are that the global economy will expand 3.5% in 2014 and 3.8% in 2015.

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Global threats are mounting: Fidelity

The hazards confronting the world economy are mounting. The US economy is recovering at an unspectacular pace of about 2%[1] and a sub-par labour market, sluggish wages growth, renewed doubts about the housing market and weak demand for the country‘s exports only portend more modest growth ahead.

On top of this, inflation is accelerating, the Federal Reserve is only months away from ending its asset buying and rate increases appear inevitable before too long. The defeat of House majority leader Eric Cantor in a Republican primary election in Virginia in June by a Tea Party candidate is expected to cement gridlock in Washington and could lead to more showdowns on raising the government’s debt ceiling. The eurozone is still in recession,[2] disinflation could fester into deflation, government debt loads are at default levels and banks are so crammed with dud loans they are restricting lending, while some are wobbling in Austria and have failed in Portugal. Even if European Central Bank Governor Mario Draghi’s bluff to protect the euro is soothing investors, the financial crunch in the eurozone has morphed into a political crisis revolving around a jobless emergency that is fanning support for nationalistic and fringe parties, the opposite environment needed to create the political jelling the euro needs to assure its survival. Housing is bubbling in countries from the UK to New Zealand.

The emerging world isn’t in much better shape, especially as it is riddled with conflicts. A civil war has broken out in Ukraine, only months after Moscow seized Crimea from its neighbour, and Russia could yet invade. Western sanctions against Moscow in response will damage more than Russia’s economy. In the Middle East, Syria’s civil war rages on. Islamists control much of northern Iraq and a third of Syria and the fighting pitting Shias and Sunnis could spread into other countries such as Jordan. Israel has been to war against Gaza for the third time in six years. Iran could still gain nuclear weapons. In Africa, Libya has become ungovernable. In Asia, China is creating tension, especially with Japan, as it seeks to broaden its ownership of the China Seas. Due to China’s flexing, military spending in Asia has inklings of an arms race. Nuclear-primed North Korea is as loony as ever while nuclear-armed Pakistan grows more unstable.

Financial and economic challenges are no-less menacing in the developing world. Argentina has defaulted for the second time in 13 years after a legal feud with “vulture funds”, an outcome that will damage South America’s second-largest economy. China’s property market is deflating, while Beijing is only making half-hearted attempts to police out-of-control lending because it worries that proper regulation might make the country miss its 7.5% growth target. So challenged are many emerging countries by current-account deficits, inflation, sluggish economic growth and plunging currencies that labels of the past such as BRICs that flagged the potential of developing nations have given way to “fragile” plus a number; i.e., the “fragile five” are Brazil, India, Indonesia, Turkey and South Africa.

Could any of these challenges morph into a shock as damaging as the collapse of Lehman Brothers in 2008? Or could some other threat not yet evident emerge? Maybe it will be a jump in interest rates. Some analysts say it’s only a matter of time before Saudi Arabia is engulfed in the political turmoil of its neighbours. Just think what that would do to oil prices. Whatever form any shock could take, if one should occur, it’s not so much the shock that should worry investors. It’s the powerlessness of authorities to respond. There is, however, one hope that shines out from the events of recent years.

It must be said that there are always dangers to the global outlook and most of them are overhyped and fizzle out. So most likely will today’s perils. Since World War II, global politics has been far more volatile than today, even when the nuclear armed superpowers confronted each other as during the Cuban missile crisis in 1962 or the Yom Kippur War of 1973 that led to the first oil price shock of the 1970s. Even amid all the current hazards, the World Bank still expects the global economy to expand this year, even if that expected pace of growth for 2014 was reduced to 2.8% in June from the 3.2% forecast the bank made in January.[3] Other good news is that inflation is only a menace in a few countries. Japan’s radical economic experiment is going well so far. In India, the dominant election victory of BJP has sparked hopes the government can enact reforms that will rejuvenate the world’s second-most-populous country. Indonesia, the world’s biggest Muslim country that only 15 years ago was an economic and political basket case, is expected to advance further under new president Joko Widodo. US banks are better capitalised and are under tougher regulation. Across the globe, current accounts are better balanced, thus removing the savings mismatch that was a key cause of the global financial crisis of 2007-08. Any shock these days would have to be huge to outdo the jolt to consumer and business confidence that was inflicted by the collapse of Lehman Brothers, most likely a once-in-a-generation event, for people are hardened to alarms nowadays. Even allowing for all this, though, the world appears more precariously placed to cope in the unlikely event of a shock than it was six years ago.

All together now

When the US sub-prime crisis morphed into a global financial crisis in September 2008 policymakers in affected countries responded almost in unison. Central bankers slashed interest rates. They provided emergency funding to banks. Those in the US and the UK embarked on unprecedented asset buying or quantitative easing, a cure invented by the Bank of Japan in 2001. Political rulers provided massive fiscal stimulus. They nationalised banks. They guaranteed bank deposits even, mistakenly in Ireland’s case, backed bank debt.

These steps succeeded in avoiding another Great Depression, a feat in itself, but some harm was unavoidable and unintended consequences arose. The resulting Great Recession ushered in double-digit jobless rates while low interest rates fanned housing and other asset bubbles around the world. Policymakers made mistakes too. Austerity policies implemented in Europe and elsewhere have hobbled economies, boosted the ranks of the jobless and worsened government debt levels. The ECB could well turn to asset buying too late to stave off deflation.

These side effects and errors could add to the severity of the next downturn in the unlikely event of a shock. The greater problem, though, is that if another jolt comes authorities are much more handicapped than they were six years ago. Most of the steps that supported economies and banking systems in 2008-09 have lost their muscle. Major central banks already have reduced cash rates to record lows, so on this score they are immobilised. Quantitative easing has been unmasked as no miracle cure, even if it can help avoid a catastrophe or deflation. Research in 2012 out of John Hopkins University found that any reduction in interest rates from asset-buying programs was fleeting and “quite modest”.[4] While other studies might be kinder to central-bank asset purchases, it’s hard to believe that the Fed would do much for the economy if , say, it restored its monthly asset buying to US$85 billion again to limit shockwaves. Such a policy retreat might even deal another blow to confidence for the Fed and other key central banks have swelled their balance sheets to levels that approach the limits of investor tolerance, or at least to levels that provide fodder for scaremongers. The new (old) world of macroprudential controls, or financial regulation, to fight asset bubbles is fraught because it injects central bankers into the centre of political decisions.

Politicians and the executives they control appear just as toothless. Many governments are so debt laden they would be challenged to pursue the fiscal stimulus matching that of 2008 to 2010. Net debt sits at 74% of GDP for advanced economies, about where the average stands for the 18-member eurozone.[5] The US government net debt has reached 82% of output, while Japan’s ratio has soared to 137%. The straightjacket that such ratios put on governments is shown by events in Japan. Fiscal pressures forced Tokyo to raise the sales tax by three percentage points in April this year, a move that acts against the consumer spending that propels the economy, thus jeopardising the gains won so from the radical monetary experiment to engender inflation and economic growth. The US debt pile is the defining restriction on Washington’s ability to stimulate the US economy, which post-2008 was helped by annual fiscal deficits averaging 9.2% of GDP from 2009 to 2011.[6] The fight over US government finances has already produced the brinkmanship over the so-called fiscal cliff and two debt-ceiling showdowns that took the country to the brink of default. Perhaps more worrying, austerity advocates are winning the political battle in countries where government debt is low. There would be few better examples than Australia, which promoters of smaller government claim is facing a budget emergency (rather than just a persistent gap between outlays and revenue) when net government debt is all of 16% of GDP. Consumers won’t be able to rescue economies either. Households are still burdened with near record debts as a percentage of GDP and, come a shock, will own plunging housing assets.

What hope then for the world if a thunderbolt materialises? Most likely this. Policymakers the developed world over know they are at the limits of their power. They must have thought of possible remedies if something bad happens. If not, they have proved they can whip up palliatives if economies and banking systems shudder. The years after the global financial crisis struck ushered in unprecedented amounts of quantitative easing and emergency lending to banks under central-bank lender-of-last-resort facilities and massive fiscal stimulus. The era produced soothers such as zero interest rates and the invention of negative interest rates, which Sweden introduced in 2009 followed by Denmark in 2012 and the ECB this year. Central banks entered into bilateral currency swaps with the Fed to ensure enough US dollars to support banks in their spheres. Other central-bank tonics were so-called forward guidance to soothe any concerns about rate increases, ECB repurchase agreements designed to shove massive amounts of money at banks, Fed purchases of mortgage-backed securities to help revive housing, Fed lending facilities for borrowers and investors in crucial credit markets and cunning bluffs such as timely pledges by policymakers to do “whatever it takes” to save this and that, as the ECB did for the euro. These cures may not be enough if strife hits again but they give hope that policymakers have the inventiveness to limit the damage in the unlikely event that a threat materialises.

Financial information comes from Bloomberg unless stated otherwise.

 by Michael Collins, Investment Commentator at Fidelity

The post Global threats are mounting appeared first on AdviserVoice.

• The share market correction continued over the last week with a whole range of issues weighing on confidence including Russian retaliatory sanctions, increased fears of a Russian invasion of Ukraine, the US finally committing to air strikes on northern Iraq, poor data in Europe, strong data in the US continuing to feed Fed tightening fears and even the latest Ebola virus outbreak. From their recent highs US shares have now fallen 4%, Eurozone shares 10%, global shares 4% and Australian shares 3.5%. The risk off tone saw bond yields and metal prices fall and the gold price rise. The $A also came under pressure helped along by a sharp rise in unemployment in Australia and a dovish statement from the RBA.
• The share market correction may have a bit more to run, but we are getting close to a buying opportunity. To be sure, the combination of factors now roiling markets is scary. But this is the usually the case during periods of market volatility. Some of the factors floating around continue to look like an excuse for a correction: Russia’s ban on various agricultural imports will hurt but needs to be put in perspective – Russia only takes 0.3% of Australia’s exports (the same as Turkey), 0.7% of America’s and 4% of the European Union’s; US airstrikes on northern Iraq have been on the cards since June, do not signal a return of US ground forces to that country and are unlikely to threaten the bulk of Iraqi oil exports most of which comes from the south; and numerous pandemic scares have come along in recent years (SARs, bird flu and swine flu) only to fade reasonably quickly. Moreover, if Europe does weaken anew it will be met by more aggressive easing by the ECB and even if these considerations further dampen global growth they will just have the effect of further pushing out any Fed tightening removing what is probably the biggest source of nervousness for investors at present.
• More fundamentally, the absence of investor euphoria and reasonable valuations at recent share market highs, continuing easy global monetary conditions and the improving economic outlook are not consistent with the start of a major bear market. So while the share market correction could go a bit further, it’s likely to prove mild and the broad trend in shares is likely to remain up with new share market highs likely to be seen in the months ahead. The key is to look for signs of the selling exhausting itself in the days/weeks ahead as a signal to buy in. Rising levels of investor pessimism tell us that the complacency seen last month is getting washed out, which in turn will help set up a base for shares to start heading up again.
• Interest rates to remain on hold in Australia. There were no surprises from the RBA which continues to indicate that a period of interest rate stability remains prudent. While the RBA’s quarterly Statement on Monetary Policy had a more dovish tone with its growth forecasts revised down by 0.25% pa and growth not seen rising above 3% until 2016, it doesn’t appear to regard these changes as “material” enough to justify another rate cut. The improvement in housing indicators, business confidence and forward looking labour market indicators tells us that rates are low enough, but with unemployment still rising, the $A still strong and uncertainty remaining about the speed of the mining investment slowdown its hard to justify a hike in rates either. Particularly with inflation expected by the RBA to remain consistent with target helped by weak growth in wages. So while the dovish tone in the RBA’s SOMP implies a greater risk of a rate cut than a hike in the short term, the most likely outcome is an extended period on hold into next year until the cycle eventually starts turning up again. In fact, the first rate hike is unlikely to come until after the Fed has started to raise rates, in other words not until second half 2015.

Major global economic events and implications

• US economic was mostly solid with the Fed’s latest survey of banks revealing a further easing in lending standards and increased demand for credit, a stronger than expected rise in factory orders, a rise in the ISM non-manufacturing conditions index to its highest since 2005, another fall in jobless claims, a smaller trade deficit for June and the mortgage delinquency rate falling to its lowest since 2007.
• Meanwhile, US June quarter earnings results remain strong. 90% of the S&P 500 has now reported with 75% beating on earnings (against a norm of 63%) and earnings growth for the quarter now running around 11% year on year, which is about 6 percentage points above expectations at the end of June. The big improvement has been on sales with 64% beating expectations compared to an average of just 41% over the last three years.
• Eurozone data was soft with a sharp fall in German factory orders, mixed readings on industrial production and a fall in Italian GDP adding to growth concerns. As expected the ECB left policy on hold, clearly preferring to give the June easing measures a chance to work. However, ECB President Draghi clearly recognises the downside risks and reaffirmed the ECB’s commitment to use quantitative easing if necessary.
• In China, soft July services PMIs raised concerns that the stimulus measures seen so far haven’t spread much beyond manufacturing. With the latest property slump likely weighing economic policy will likely need to be eased further. Meanwhile trade data provided mixed signals with weaker imports but a double digit gain in exports.

Australian economic events and implications

• A bad run of Australian data, but not that bad. The past week saw a bad combination of Australian data with the unemployment rate spiking to 6.4%, the trade deficit remaining large in June and June quarter real retail sales falling 0.2%. Australia’s official unemployment rate is now above that in the US and as a result of the June quarter trade and real retail sales data there is a possibility that June quarter GDP growth will be negative. However, there are several reasons not to be too alarmed. First, just as the jobs figures at the start of the year looked unbelievably strong, they now look too soft. In particular the rise in the unemployment rate looks to have been exaggerated by a rotation in the ABS sample and a change in the ABS survey questions. Second, forward looking jobs indicators – such as ANZ job ads, skilled vacancies and the employment component of the NAB business survey – all point to stronger jobs growth. Third, the June quarter trade data looks to be payback for the strength seen in the March quarter. Fourth, June retail sales showed a solid bounce back from the Budget related hit in May. Fifthly, it’s worth noting that the AIG’s services, construction and manufacturing conditions indexes all rose in July. Finally, housing finance remained strong in June telling us the housing recovery remains on track.
• It’s way too early to draw any conclusions from the June half profit reporting season in Australia as only a few companies have reported. But so far so good with more companies seeing profits up than down and dividends continuing to increase with Rio being a standout on this front. The big miners are clearly responding to investor demand for dividends with Rio’s dividend yield now being 4.8% and BHP’s 4.9%.

What to watch over the next week?

• In the US, expect a 0.3% gain in July retail sales (Wednesday), a 0.3% rise in July industrial production, another solid reading in the Fed’s New York regional manufacturing index and a benign July PPI reading (all Friday).
• Eurozone June quarter GDP data (Thursday) is expected to show flat growth.
• Japanese June quarter GDP (Wednesday) is expected to fall by 1.8%, reflecting payback for the pull forward of demand ahead of the sales tax hike. This was expected and does not represent the start of another recession.
• Chinese July activity data (Wednesday) is expected to hold around the improved pace seen in June with retail sales expected to be up 12.5%, industrial production expected to rise 9.1% and fixed asset investment to come in around 17.4%. Money supply and credit growth is expected to have slowed back a bit from the strong June pace.
• In Australia, expect to see July business confidence hold around June’s reasonable levels according to the NAB business survey (Tuesday), a 1% rise in June quarter house prices (Tuesday), a further recovery in consumer sentiment (Wednesday) reflecting the gains already seen in weekly consumer sentiment surveys and continued modest wages growth in the June quarter (also Wednesday) of just 2.5% year on year.
• The Australian June half profit reporting season will ramp up with 36 major companies reporting. Consensus earnings estimates for 2013-14 are for 12% growth led by resources with +28%. The combination of the lower iron ore price, the higher $A and the hit to confidence from the Budget suggest a bit of downside risk to consensus estimates. Given relatively elevated PEs compared to a few years ago underperformers will be hit hard. Most interest is likely to be on outlook statements with a bit of upside potential for companies exposed to housing, non-mining construction & retailing. Consensus 2014-15 earnings growth estimates are modest at +5%.

Outlook for markets

• Shares have been at risk of a correction for some time and it now seems to be upon us. It may have a bit further to go but we see little evidence suggesting we have seen a major market top. Valuations were not onerous at recent highs, global earnings are continuing to improve on the back of gradually improving economic growth, monetary conditions are set to remain easy for some time and there is no sign of the euphoria that comes with major share market tops. As a result the current pullback should be seen as providing a buying opportunity as the broad trend is likely to remain up. Our year-end target for the ASX 200 remains 5800.
• Bond yields are likely to resume their gradual rising trend over the next six months as the US economy continues to strengthen. This and low yields is likely to mean pretty soft returns from government bonds.
• The combination of soft commodity prices, an increasing likelihood the Fed will start raising interest rates ahead of the RBA and relatively high costs in Australia are expected to see the broad trend in the $A remain down.

By Dr Shane Oliver, Head of Investment Strategy & Chief Economist

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Important note:While every care has been taken in the preparation of this document, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455) make no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This document has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This document is solely for the use of the party to whom it is provided.

The post Weekly market & economic update – week ending 8 August, 2014 appeared first on AdviserVoice.