Research (Penizenavic.cz)
Markets  |  July 05, 2012 09:53:02

The views of investment professionals: the economy in the hands of the impotent politicians


What politicians are doing to address current economic challenges, both big risk is inflation, both globally and within the Czech Republic? Now this was a topic on which we asked investment professionals who have time to add more answers to their message to retail investors.

The G20 summit - no surprise, did not take place

The recent G20 summit held in Mexico from the politicians, with regard to the experience of previous summits, and did not expect too much to be said that the outcome of this summit did not deviate from the line. Impact of these meetings are usually limited, no major surprises there does (and major surprises compared with the general expectation is that which affects the financial markets), a statement of measures to improve the functioning of financial markets are emerging for some time, as well as the intentions of theconsider concrete steps towards a more integrated financial structure involving joint supervision of banks, addressing the situation of bankrupt banks and deposit a performance guarantee on the very first time. We have to wait until the first true measure, but on historical experience, this is likely to come to any new significant adverse political and economic events, confirms Paul Vondracek of LBBW Bank CZ, as very similar to it then sees John Kudláček of AXA Investment Company. Summit G20 in my opinion did not deviate from the current pro-growth rhetoric of political leaders. Apel toward union bank these days no longer surprising. As a minor nuisance can be seen with rupture D.Camerona F.Hollandem regarding taxation of the rich. Could be a surprise so perhaps praise Saudi Arabia and China,says Jan Kudláček. I approached the rest of the investment professionals share similar opinions, that when nearly 85% of them expect a neutral impact of this summit on the financial markets.


Economies in the hands of politicians impotent

The influence of politicians on the economy and financial markets is not very significant, but do not necessarily lead politicians to their ideas.Effect of policy on the economy in the last 50 years has grown significantly. The share of government expenditure in total GDP is already so great that political decisions significantly affect the markets. Moreover, not only about expenditure alone, but also the regulation of markets and setting the rules, confirms the growing influence of politics on the economy of the company, Jan Simek, Broker Consulting, Inc.
After the outbreak of the American mortgage crisis and subsequent global economic recession, politicians decided influence on the economy and consequently the financial markets has dramatically increased for their decisions, then receive a certificate from the imaginary part of its voters, but it looked as if a certificate of politicians who handed out the investment professionals themselves ?

Investment professionals in this area in particular pointed to the increasing regulation and increasing the tax burden to the economy more harm than benefit. With the naked state intervention in the economy, raising taxes and excessive regulation will not lead to the desired kick-start economic growth. The state is not and has never been an effective manager and the economy is more favorable when leaving money in the pockets of other economic entities. The cause of the current crisis, financial markets are, you only like canaries in the mine showed erárního the problems of living on credit. States should seek to improve conditions and infrastructure for free enterprise and his wings nepřistřihávatSays David from Kufa Conseq Investment Management. And according to John Kudláčka of AXA Investment companies would benefit from more markets, more if you can live your own life. The influence of politicians perceive G ENERAL the financial markets negatively. Winged laissez-faire laissez-passer and in today's times of crisis are, paradoxically, more than ever, says Kudláček.

Passed by U.S. policymakers in the euro area is rather to retake

Regarding control, you're almost become synonymous with the eurozone meeting of statesmen who would like their help solve problems faced by some Eurozone countries.Compared with other developed countries, it is then, the euro area economy, which deviates its bondages, which is confirmed by Peter Rabbit from Pioneer Investments words: U.S. politicians (Obama administration) do not quite best, on the other hand, the rest of the world's scale is not such a disaster. The U.S. economy is more, unlike the European, businessmen or corporations affected than political decisions. Because of this, the U.S. economy is significantly more flexible and was able to recover from the financial crisis, although it was affected more. Interventions of European statesmen, however, do not bear the desired result, re-growth and politicians have attended if forces. This is confirmed by the words of John Schiller Conseq Investment Management.The current economic crisis, especially in Europe, has become largely a political crisis. Politically motivated interventions and requirements for more proactive approach to mitigate the impact of the economic cycle further prolong the crisis. When political "impotence" to broaden the consensus helps the formation of radical ideas and contribute to the creation of political and market instability, said John Schiller.

And "Bear" from the East?

The importance of Russia in Europe in recent years gradually grew, not only because of Russia's mineral resources on which Western Europe is heavily dependent, but also their political decisions, which is currently the hottest planned economic aid to Russia crisis zmítanému Cyprus.Basics of the Russian economy may not be as strong as it first appears, its share in it yet again bear and politicians. Politically worst in Europe led by Russia clearly. Wasted potential reforms and increased revenues from oil. The gradual tightening of the screws of power and influence over the management of companies, which increases the uncertainty of investors who do not know whether a corporation is working to shareholders or for the benefit of influential groups, says Aleš Prandstetter of CSOB Asset Management, Inc., an investment company.

The risk of inflation - the global peace front

One way to re-start economic growth can also be pumping money into the economy by central banks. New grant of sap in the form of increased amount of available funds normally wakes up the economy to grow.Treatment of money has a minor effect in terms of risk of increased inflation. Current pumping liquidity into the economy through banks, however, provide neither desired economic growth, not so much feared inflation. Inflation scenario does not show mainly because the money that central banks pumped into the system, remain on the balance sheets of big banks. Through these banks get money into the real economy and the banks are rather used to clean up their own balance sheets, says Milan Valentík of ČP Invest. Inflation is a global perspective is not currently a significant hazard. And it is perhaps a pity in a way. In my opinion, the easiest way to reduce debt debt "zinflovat". For example. U.S. inflation in the years 1945 - 1981 participated in half to reduce the debt of astronomical 117% to 32%, "Says Peter Rabbit from Pioneer Investments.

The risk of inflation in the CR - the recovery of the tax shock

In contrast the Czech Republic since the beginning of inflation is still rising. It is the situation in the Czech Republic in comparison with developed countries, something different? According to investment professionals has been a recent increase in inflation due to fiscal shocks, after which it would now take place again to calm the situation, at least until, in the Czech basin will see additional changes in the tax system.The current situation in the CR is significantly influenced by fiscal shocks. You will probably repeated in the next year. However, if we look at the medium term, we expect that in the aftermath of these shocks, the inflation was rather stable. This scenario allows for assumptions nevyhrocení situation in the euro area, which could have a greater impact on exchange rate volatility, confirms Milan Vanicek from J & T Banka. Just see it and John Schiller Conseq of Investment Management, which says rising inflation is due mainly to administrative changes in tax rates. Consumer demand is very weak and this party to any inflationary pressures at present does not occur. Even from the perspective of monetary policy are the latest inflation figures cause for concern.At the time of turnover of domestic demand CNB has a large space for the control of inflation expectations, which would further receded in the case of weak external environment, supported by the strengthening crown, and who could agree with the recent reduction in interest rates on the main part of the Czech National Bank.


Media has predicted 36 of the last 2 recessions

Zig Ziglar, a famous businessman once pointed out that the media in pursuit of sensationalism accurately predicted the arrival of 36 of the last 2 recessions. The media picture of the current situation in financial markets is overwhelmingly sinister than it is in reality. What they sent in this respect investment professionals to retail investors?

David Kufa, Conseq Investment Management
Sometimes it hurts a little break from current events, put your feet up and look at things from a distance. Larger or smaller fluctuations in the economic cycle and financial markets are a natural part of the market economy and are usually self-cleaning effect. Weak or incompetent objects disappear giving way to a stronger and more successful and which will eventually become the engine of the economy. Everything bad is good for something.


John Schiller Conseq Investment Management
Take the dramatic headlines and television news by a large margin.


Lukas Vacha Conseq Investment Management
The current turbulence is only an episode, what few there already was and what he lived. The situation in the markets is certainly not good, but not catastrophic. The prices of risky assets is the most future bad news is already recognized and so the future may bring cenotvorné impulses in the sense of positive than negative surprises. A smart investor wants to buy when others want to sell, the current situation therefore offers an interesting long-term opportunities.

Jan Kudláček, AXA
Ignore the media, whose main aim is to marketability, too much attention.Bad news sells better, of course, so it is important to be able to do things on their own opinion and not only read headlines and catastrophic panic.


Paul Vondrasek LBBW Bank CZ as
According to the predictions of the old year or two we find that even today would be significantly worse than the so catastrophic scenarios take it easy a little bit more as a memento not bet everything on one card, do not try to earn quickly and miraculously, patience, be prepared for possible further decline portfolio value and still have a reserve.


Branislav Ink, ING Investment Management
To remain consistent in their investment strategy, and despite turbulentnému developments on financial markets. To buy assets, which believe and mean and kept the tie, despite fluctuations in financial markets.


Milan Vanicek, J & T Bank
"I believe that the current situation is unflattering, but for the small investor who had mostly invested in secured assets, or in savings accounts, should not bring any greater risk. In the case of investors who have their broader portfolio and would also address other (riskier) investments recommended increased vigilance and also a greater degree of patience. We need to also realize that in such times the best investment opportunities arise, because the emotions are the driving force of certain investments of more than rational thinking.


Jan Simek, Broker Consulting:
Media are looking for sensation. Negative and related negative emotions are stronger than positive. I sent a message: Do not fear the future and wipe your head in the countryside - from newspapers, from negativity.

Ales Prandstetter, CSOB Asset Management, Inc., an investment company

Disasters usually come suddenly and without much warning. If behind every corner on the investor jumps lnějaké specter of crisis scenarios, it is reasonable to keep cool and adhere to objective criteria. Why buy an asset, where the yield will be minimal at best and price is at historic highs? Just for that is seemingly without risk?


Milan Valentík, CP Invest
Diversify risk. Not bet on one card. Stick to more conservative strategies. Excellent alternative to equities are risky corporate bonds (bonds of companies), which are less risky, but in the last ten gives a similar yield as shares.


Peter Rabbit, Pioneer Investments
Perhaps it is that the financial markets every day looking. Most small investors (unless they are stock speculators) has a considerably longer investment horizon. It is then unnecessary to have deteriorated over the one-day evenings catastrophic news. Unfortunately, the media have the tendency to inform the disaster rather than on the positive events.

Survey of investment professionals of AXA, Broker Consulting, Inc., Conseq Investment Management, C-Quadrat, CSOB Asset Management, Inc., an investment company, ING Investment Management, J & T Bank, LBBW Bank CZ, a. S, Pioneer Investments.

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