The Rather Talented Mr Draghi

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• Publié par: sarasin-partners-llp
• Nombre de lectures: 34
• Langue: English

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The Rather Talented Mr Draghi

PR Newswire LONDON, August 29, 2012

LONDON,August 29, 2012/PRNewswire/ -- - Sarasin & Partners' Guy Monson on the 'Draghi Effect' and implications for global investors

Mario Draghi is proving to be a surprising friend of global markets, with world equities up by around 10% since his appointment to the ECB inNovember 2011. Most of the gains came in the aftermath of his big policy announcements; namely, the first round of his trillion euro LTRO programme last December, and more recently in his "whatever it takes" speech inLondonin July. Whilenone of these actions alone are a panacea for restarting European growth, Draghi's pledge of co- ordinated action has calmed markets with both its technical competence, political guile and tentative roadmap for ECB intervention and (perhaps ultimately) fiscal union.

So what does the 'Draghi Effect' mean for global investors?

'Yield assets' will continue to be attractive, as financial repression caps cash and government bond yields at levels well below inflation The move to tighter and tighter blue-chip corporate credit spreads is almost inevitable, and lending to profitable companies with strong cash flow could be the more 'gilt-edged' investment for some time yet The property market is another natural winner of a low interest rate, 'search for yield' and 'flight to safety' environment Investors will have to rely disproportionally on equity multiples expanding rather than earnings rising, against a background of likely further loosening of monetary policy, slowing GDP growth, a European consumption shock and rising food and labour costs impacting emerging world profits Quality, cash-flow and balance sheet strength will remain the key stock criteria. So called 'super-cap' equities still offer valuation discounts and superior financial strength to much of the rest of the market Sterling now appears more vulnerable to the continued UK slowdown, further bond purchases under the latest round of QE, increasingly poor export data, and potentially rising tensions in the ruling coalition.We are beginning to reverse our long-term euro underweight versus the UK currency We see value in selected bank and insurance bonds, which are materially less volatile than equity (and often higher yielding) while the bonds of the best industrial companies and telecoms inItalyandFranceare often preferable to equity For many large multi-national companies, the quest for productivity drives a need to innovate, and the use of technology is a major part of the pursuit of ever greater efficiency. Expect a 'disrupt, innovate or stagnate' doctrine to define an increasing part of the economic and corporate landscape

For the full article please visit http://tinyurl.com/clu3ek5 Sarasin - Sustainable Swiss Private Banking since 1841. -http://www.sarasin.com The Sarasin Group has its roots as a leading Swiss private bank. As an international financial service provider committed to sustainability, the Group is now represented in more than 20 locations inEurope, theMiddle East, and Asia. At the end ofJune 2012it managed total client assets of CHF 99.1 billion and employed around 1,700 staff. Sarasin & Partners LLP -http://www.sarasin.co.uk Sarasin & Partners LLP is a limited liability partnership between Bank Sarasin and local management inLondon. Sarasin & Partners manages assets for private clients, charities, pension funds and institutions both in the UK and internationally which include a range of offshore and onshore unit trusts and investment funds. Sarasin & Partners is a market leader in its thematic approach to investment, winning awards for this approach, as well as for its high level of reporting to its clients. The company is authorised and regulated by the UK Financial Services Authority and passported to provide investment services in theRepublic of Ireland. © 2012 Sarasin & Partners LLP - all rights reserved This document can only be distributed or reproduced with permission from Sarasin & Partners LLP. Please contact [e-mail] For more information please contact: Ivo Forde| FinPublic Relations Ltd T: [phone] | e-mail: [e-mail]