Research (Penizenavic.cz)
Markets  |  August 14, 2012 13:00:48

The views of investment professionals: States do not know what to save before


In the next sequel of the "views of investment professionals" organized by the portal PenizeNAVIC.cz investment professionals comment on issues such as debt problems at the level of individual regions, the potential of investing in government bonds or corporate investment and meaningfulness as such.

Government bonds of developed countries for many years served as a conservative investment return carrying quite interesting. Government bonds, emerging markets were then overlooked for a long time investment, which was associated with high yield, but also but also a very high risk. Cards in this way really really stirred up the global economic recession, which unveiled weaknesses in some developed countries and vice versa poodkryla potential of some emerging countries.What is the potential for investment in government bonds in different regions, say in the next 3-5 years?

Given the situation on the market which is influenced by events in Greece and Spain, I believe that the euro area bonds can not be readily put into one package. The so-called. southern periphery will probably still have some difficulties, which are not within the specified time zone at ease. On the other hand, bonds of countries such as Germany, Holland and others like them (the northern periphery) almost do not assume anything, so even short-term have a negative yield.These bonds are appropriate in the current situation as a hedging tool for large negative decay scenario the euro area, but in the standard scenario, say investors are not very interesting in terms of their profitability, says Milan Vanicek from J & T Bank. Similarly, it is at least as "risk free" bonds regards Lukas Vacha sees Conseq of Investment Management and Peter Břicháč of LBBW Bank CZ. Interest rates of safe third country "attacking" the lowlands, which until recently we hardly imagine. As an investment now makes sense only as a "risk free" parking the money nejbázlivějších investors. The others, let, look riskier waters in European countries with which it is now more or less "tipped," or outside Europe.If they are lucky and these countries will stand their problems, they will enjoy in the future revenues of interesting, says Lukas Vacha. Due to the current income well rated government bonds, which move in 5-year bonds well below one percent, have already left almost no room for any further revenue potential of these assets. In developing countries the situation is slightly better, especially for bonds in local currencies, says Peter Břicháč.

Offers interesting potential for corporate bonds

Corporate bonds were at the beginning of this year, dubbed the role of "the best investment of 2012", the market for corporate bonds in the U.S. and Europe is experiencing a real renaissance. About as interesting investment really is?

Thomas Paw from C-Quadrat Asset Management

In the current economic situation crystallizes the paradox between state and business. It is against each other enterprises with a relatively balanced and healthy and balances against the state with excessive debt and a negative trade balance. Additionally, government bonds are due to low interest rates in Western Europe in the future less attractive than in the past. By investing in corporate bonds, the investor receives the interesting possibility of participation of enterprises, long-term growth and dividend income.By investing in corporate bonds can also reduce the dependence on the portfolios of any problems in the state sector and additionally benefit from the dividends of corporate bonds.

Richard Stadler, CSOB Asset Management, Inc., an investment company

Yields on corporate bonds of issuers with good rating (one A) are very low and therefore the potential is relatively small. Interesting opportunities but may be lower rated bonds and bonds primarily of European financial institutions. This type of investment is only for risk-based investor, as a high credit risk.

Jan Simek Broker Consulting, Inc.

Businesses generally go through the crisis better than the states and households. The perception of government bonds as a safe investment due to high debt ratio changes, investors are starting to discover the "safety" of corporate bonds. The investment is suitable for balanced or growth investors. And of course, would not miss corporate bonds in the portfolio of investors who are trying to protect property and therefore resort to what varied composition of its portfolio.

Peter Břicháč LBBW Bank CZ

Corporate bonds, unlike Treasury bonds one of the bond investments, which is currently able to cover inflation, or at least bring a positive return. Offer corporate bonds, especially in the euro and the dollar very wide both as a revenue mainly from the perspective of risk.Therefore, there is great emphasis on knowledge of the issuer or diversification, which for the average investor very well solve the mutual funds.

Lukas Vacha, Conseq Investment Management

Although some states are now "in crisis", the corporate sector is doing surprisingly well. Rationally speaking, problems of "their" countries of concern, although in the case of an escalation of the crisis is touching, but not usually fatal. That's the key for bond investors, which is not so important as its prosperity of businesses survive and which will enable it to repay its obligations. The bonds reflect their current gloomy mood of investors and trading at prices that imply returns close to those investors expect more of the shares (např.10% pa).

Michal Valentík CP Invest

Compared with stocks are less risky and well-constructed portfolio can have an average maturity of three years while carrying an interesting yield about seven percent per year. Bonds thrive in harder times, because unlike regular interest bearing shares. The issuer shall include payment of interest to financial expenses, thus the profit of the company during periods of economic downturn may shrink to zero. Shares so does the potential for growth, but the bond thrive thanks to the regular payment coupon. Also in case of bankruptcy creditors (bondholders) before meeting the owners (holders of shares). A bond can be supported by a lien on certain land, buildings or patents, which further reduces the risk of investment. The investment is suitable for conservative investors looking for appreciation to seven percent per year.Suitable are also mutual funds focused on corporate bonds, through which small investors can invest on a regular basis in the order of several hundred per month.

Peter Šimčák, Pioneer Investments

Currently a higher yield. It should assess the quality of the balance sheet, income statement and management just as the government, where you can use an analogy: income = GDP, inflation, balance sheet = debt / GDP, current account management = who rules, monetary and fiscal policy. The process is an analysis of what the valuation is cheap / expensive due to the risk. Only after this analysis, we can say what is the better investment.

Milan Vanicek, J & T Bank

Interest lies in the fact that investing in corporate bond clearly expressed on how the firm stands. If you do not over-indebted and is in a standard business environment, which allows it to achieve sufficient cash income to ensure debt repayment and interest, then it is easily identifiable, whether such investments profitable. Of course there is less risk than, for example in shares. We must not forget also that investment in government bonds is no longer in some cases considered so-called risk-free, which also builds corporate bonds to improve the perception of investors. This investment is suitable for a conservative investor who is willing to hold investments to maturity and collect coupon payments. It may also show a bit speculative approach with profitable sales in capital appreciation.

Debt at the level of individual regions? Quite a serious problem ...

In addition to the debt problems of individual states are increasingly beginning to talk about the problems with debt at the level of individual regions. In Italy the situation is critical especially in Sicily, Spain got into trouble and so "rich" region such as Catalonia, in the U.S. earlier this year declared bankruptcy several cities. About how serious a problem is it?

Jan Simek, Broker Consulting, Inc.

Are indebted not only to States, their citizens, but even a specific region or city. It shows the depth of the problem and it is completely misguided thinking. We used to live in debt, with the vision of better tomorrows, with a vision of continuous growth. The current crisis shows just how deep it is a mistake. Yet it seems that in people's minds, nothing substantial has changed. The major changes ahead, the less consumption and debt, both at the level of household budgets, cities, counties, and states or superstate. The debt spiral can escape only by changing thinking and behavior, which confirms in each clinic to deal with debt ...

Peter Břicháč, LBBW Bank CZ

This is another problem, which currently employs economists and policy makers. With the current economic situation is probably the strongest in Spain, where municipal bonds pushed yields above 10%. Significant pressure on municipal bonds high yield is probably the most visible and quite logical requirement of investors. Who have a risk of this investment to pay leave. The trouble is that the default of one bond municipalities will increase pressure on the yield of the entire municipal bond market. Rising debt service costs borne by the entire market. That's what worries the U.S. now. Spain is but a little further. High investment costs from previous years and the high expectations of return on real estate market, especially from Spanish municipalities get most of the existential problems, which are then passed on to their creditors, which are mainly local banks and the state does not know what to save first.

Lukas Vacha, Conseq Investment Management

The finale is always the credit of a country as their savior. problems of regions and cities are more than a subset of its cause.

Milan Vanicek, J & T Bank

This I see as a serious problem especially in countries that are heavily indebted because of the additional acquisition of additional resources is difficult. On the other hand, I believe that it is still manageable situation such as selling assets, the reforms or similar steps.

Investing is still a sense

Novice and experienced some investors from investing begins discourage increased volatility in the markets and read the situation worse in the future, viz.situation in Spain, which markets a few weeks after the notification of aid to Spanish banks have grown significantly, now are plumbing in connection with the concern that such assistance would not be enough. Does investing still make sense? According to investment experts, definitely yes.

Thomas Pack, C-Quadrat

Besides having investment from our point of view still makes sense, even becomes more important to maintain the standard of living for the future. In particular, increased volatility in global equity markets for investors and mutual fund clients, a major challenge. In this difficult phase in the markets we believe is particularly important to focus on preserving capital and flexibility to adapt the composition of the portfolio. In our view it is very important to control the amount of active equity component - that is, in these uncertain times, be able to reduce investment risk.On the other hand, it is important to constantly monitor opportunities in order to invest early in promising sectors such as shares in emerging markets or commodity titles.

Richard Stadler, CSOB Asset Management, Inc., an investment company

In fact, the volatility of stock markets last six months is relatively low (VIX index). It is true that the Spanish and Italian yields fluctuate a lot. The global economic situation is uncertain, especially in Europe. Reluctance to invest is evident in declining volumes in equity markets both in the U.S. and in Europe. It is hard to predict, but if history will repeat some capital markets and not fade away along with democracy (and your money) and just the greatest time of crisis and fear of the future is the best opportunity.Baron Rothschild said: "Buy when blood is in the streets."

Jan Simek, Broker Consulting, Inc.

The question can also provocative turn, is different than the chance to invest? There is consumption, yes, but if we defer consumption over time (you need to save up for retirement), then I see no other alternative. In times of crisis it is very difficult to believe in the growth of financial markets, but the long term shows that this is a great crisis is the ideal time to purchase the investment timing. Behave differently than most, when most markets buy at discounted prices. Moreover, if the markets should occur any apocalypse, then the investor funds will not be spared either at home or in a bank under his pillow. In such a situation we are on the verge of social unrest, major socio-economic changes and it is difficult to estimate what would be the best investment. Perhaps only gold, guns and canned food ...

Peter Břicháč, LBBW Bank CZ

Meaning, of course, and it has at all times. Not all are suitable all assets and certainly not suitable for all all assets and all life situations. However, deposit funds in financial assets sensible and balanced manner should always pay off. It's just finding the right balance and in particular the investor must first be aware of all the pros and cons of an investment that does. For example, equity investments may be a solution in an uncertain period dividend stock titles that are to some extent, able to withstand market fluctuations. For a longer investment horizon, the rule that if the investment yields the required annual yield is the current value of this important investment. Indeed, the current market presents different ways to the impact of volatility and reduce the risk of even a minimum.

Lukas Vacha, Conseq Investment Management

Investing has always been and always will be associated with some risk, even at the level of the same tools is not constant in time and sometimes be higher or lower. This is a common phenomenon, not a phenomenon of our time. Investing is at its most basic definition of "postponement of current consumption in favor of the future." Due to the fact that man is the biological nature of its economically active only in certain parts of your life, it will be investing in any current circumstances will only need to change the specific investment vehicles.

Michal Valentík, CP Invest

Investors still has meaning. Just depends how much risk we take.Of course in turbulent times such as now, the investor should look around for more conservative investments, such as quality corporate bonds. It is important to choose those companies that have a long history, and without whose products we hardly imagined themselves being.

Peter Šimčák Pioneer Investments

Yes, everyone has to make investment decisions. Even someone who thinks she's safe deposit insured by the State Bank carries a large bank risk and the ability to cover the fall of the large state banks. Thus, the risks that cause high volatility in the markets and which discourage investment. I think that well-prepared portfolio consisting of cash, bond quality, high-quality stocks, commodities (not just gold, but gold) and real estate is the only right way.Mutual funds offer access to all these markets, big investors can buy titles and straighten.

Milan Vanicek, J & T Bank

I believe that investing still makes sense. On the other hand, it is necessary to adapt to new conditions and maybe even the new standards. It is obvious that we live in interesting times, perhaps that rewrites the history of modern and can break down some lasting truth. But even in such an environment suitable investment strategy can bring interesting improvements. At the same time an interesting little twist your eyes and absorb the uncertainty as an opportunity, because in such an environment at the same time form a attractive prices on some assets. Just look to the U.S. on home prices and find that the example can be very tempting for some investment opportunities.It may not be entirely ruled out that a similar opportunity may occur for example on the Spanish coast.

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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