Investment Outlook 1305: Rising values in sight

7/30/2019 Investment Outlook 1305: Rising values in sight

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InvestmentOutloo

Rising values in sight

MAY/JUNE

private banking investment strategy


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3/35

3Investment OutlOOk - mAy/June

Table of contents

oo

rodcio..........................................................................................................................5

Poroio rag .................................................................................................................Th: Liqidi driig ar ad h coo ............................ ....................... 10Th: Nw driig orc ro i o copio .............................. 13

markets and asset classes

Macro ar ............................................................................................................ 1Nordic qii ............................... ................................ ................................ ................... 1Goba qii icdig h Cor Mod................................................................20Fixd ico ............................ ................................. ................................ ........................ 2Hdg d ............................. ................................ ................................ ......................... 2Ra a ................................ ................................ ................................ ......................... 2Pria qi ................................ ................................ ................................ .................... 30Coodii ........................... ................................ ................................. ......................... 32Crrci ................................ ................................ ................................ .......................... 3


4/35

4 Investment OutlOOk - m Ay/June

Thi doc prodcd b SEB coai gra arig ioraio abo i i prodc. Nihr h aria or h prodc dcribd hriar idd or diribio or a i h Uid Sa o rica or o pro rid i h Uid Sa o rica, o-cad US pro, ad a chdiribio a b aw. hogh h co i bad o orc jdgd o b riab, SEB wi o b iab or a oiio or iaccraci, or or ao whaor which ari ro riac o i. i rarch i rrrd o, o hod i poib rad h rpor ad h dicor coaidwihi i, or rad h dicor raig o pcic copai od o www.b./b/dicair. oraio raig o ax a bco odad ada o or idiida circac. prodc prodc a rr id o ri. Thir a a a a w a ri, ad hioric rr ar ogara o r rr; i o ca, o ca xcd h iiia ao id. Whr ihr d or o i i crii doiad i a origcrrc, chag i xchag ra ca ipac h rr. Yo ao ar rpoib or or i dciio ad o hod awa obai daid ior-aio bor aig h. For or ioraio pa ir aia h K or oraio Doc or d ad ioraio brochr or d ador rcrd prodc, aaiab a www.b.. car o hod adic aiord o or idiida circac ro or SEB adior.

oraio abo axaio. a cor o or raioa Pria Baig ofc i Lxborg, Sigapor ad Swizrad o ar obigd o p oriord o h ax r appicab i h cori o or ciizhip, ridc or doici wih rpc o ba acco ad acia raacio. SEB doo proid a ax rporig o orig cori aig ha o or proid cocrd ahorii wih ioraio a ad wh rqird.

Goba Had o ocaio+ 46 8 6 6 ha.pro@b.

Ad OlDp Chi fcr+ 46 8 6 6 4adr..oo@b.

l gu aGoba Had o Macro Srag+ 46 8 6 6 ar.apa@b.

Vic d OliviPoroio Maagr adHad o Srag Lxborg+ 6 6 icor.doiira@bgrop.

l gqFixd co Sragi

+ 46 8 6 6 8ar.graqi@b.

ej luEqi Sragi+46 8 6 6 6bjor.da@b.

H coqEqi Sragi+46 8 88 6 h.croqi@b.

J EvldEcooi+46 8 6 6 joa.ado@b.

Ri K

Ecooi+ 6 6 ri.a@bgrop.

c-F sEcooi+46 8 6 6 8car-ip.robac@b.

c kohoCoicaio Maagr+46 8 6 6

cciia.oho@b.

p buhCoicaio Maagr+46 8 6 6 pria.bch@b.

Thi rpor wa pbihd o Ma 8, .Th co o h rpor ar bad o ioraio ad aai aaiab bor Ma , .

oo


5/35

5

iouo

Investment OutlOOk - mAy/June

Capital markets are well on their way orward.

Prices are moving upward in stock markets, re-

inorcing a sense o economic healing since the

crisis years. awa, h picr i copx. Toda iaio i rch a c o h goba db crii. i ow accopa-id b daic ad, i a ca, a cra bapoici. br o i odr cooic hiorha ad i io h hior boo. o h i h aba-do o h Bro Wood wih i doar-god

pg, a cod i h aig o US iaio i h 8 ada hird i h rc goba db crii ad i ogoig ro-io. Worh oig i hi cox i ha Pa Vocr, orrChaira o h US Fdra Rr, pad a adig rodrig a hr o h : a rarab carr.

Toda a orh prob i big aacd h ghpriod o daio i apa d o r high pria aigar h oc ar crah o h . apa dciioar, boh h cra ba ad poiica adr, ar ohir wa oward ipig a cooic i adrrcrig progra ha i aog h o ar-rach-

ig i a cor or a og i. i coparab o h USiaio-aig or. Th progra i a cobiaio ooar ad ca poici. Righ ow w ar ig h i-pac o hi oar poic. Cra ba i ohr cori h Eropa Cra Ba ar ow owrig hir ir ra o ai dad ad hp h ar.

Th crr iaio ad o o crcia qio. o h i whhr h a oar poici w arig wi gra br dad i h ra coo, oro boo ar aaio. Th pric o w arig ow ar i ac ora, ic ar o ahad oarig, b i arig do o ariai h ar wi

probab o agai. Thi i o Investment Outlooki-cd or rcio o h i. W xai h ro ocra ba poici i h coo a w a hir hodad c i raio o crr cooic codiio. Wao dcrib wha w a w pr io h r.

Tradiio i a ipora o a i aciii,b i ca ao b a hidrac. Soi pop a iwha i happig bca h ar oo rood i hior. ad how ar pror ao io a argdo o bhaiora cic. Thi i rcd, or xap, irc Nob Priz i cooic.

Th word i chagig, ad o ar h wa a i gr-ad. Wi h driig orc w ha i h pa -ar b rpad? Probab o. Saig ad db i ariocor o h coo ha chagd, ad r dadwi par co ro w dircio. Thi a b iporao coodi pric. Th dad or coodii i odri highr i h ar growh pha o cooi, bwh dad ar ar, w par rg. W ab o h hrhod o ch a pha oda.

Th ar propc w dcrib i Investment Outlook

ha a id poii i, icdig a bi i riig arad a graio. ci cra ba, ror i apa,abiiaio i h US abor ar ad grada icraigri appi ad opii ar acor ha wi ai hdrig rd. Riig a a hod ad o grarwiig o h cooic wh i oio i h oro copio ad i. Thi i probab h coro w ar abo o wi.

Hans Peterson

Global Head o Asset Allocation

Rising values in sight


6/35


Marets are providing new opportunitiesW ha a irig iaio i acia ar, whr

h rog driig orc oda i a powr coribio oiqidi ro aggri oar poici big prd righow i a pac arod h word. apa ad h UidSa ar wo ipora xap. Thi a ha capia iig rr i dir pac righ ow. iporacircac o hi arch i ha hr i i o cpiciabo h rgh o h goba cooic rcor.

a coqc, capia ha b rai coi iig o a wih ow ccica ri bod ad ho por-io o h oc ar ha ar a ii o cooiccc (di cor). Thi, i r, ad o rai highaaio i porio o h ar. Mawhi i cra op-

porii i or ccica porio o h ar.

Tacica paig, ar par d ioraio abo hrgh o h coo ia iga i acrocooic ai-ic ad ro copai. chag i iw ( cpici)wod ad o a dir ar rd. Whi waiig or hacro picr i paricar o ia grar ri appi,hr i h rao o aa ario a ca i grardph, oc or o icrocooic aai ad hrbidi h orc o rr ha ha h gra poia.

fli gy

diFFerence in tHe perFOrmance OF deFensive

and cyclical eQUitie s glObally

The weak perormance o cyclical sectors is evidence o

doubts about the strength o the economy.

Sorc: Macrobod

r ri ad rr xpcaio ar a ro h SEB Ho Viw ad ar bad o or acro cario ( pag ). Thxpcaio cor h x oh. For qii, h orca rr o h goba oc ar. For xd ico, h orcarr o a ba o i grad ad high id corpora bod. Th ra a orca rr o h ra a i- r (RET) ar, whi h coodii orca rr o a ba i which h rg, idria a, prcio aad agricra cagori ar qa wighd. or crrci, h orca rr o h apha-graig capaci o a origxchag (FX) radig aagr.

Sic h prio diio o Investment Outlook(pbihd o March , ), i ordr o ipro raparc w ha cho ochag or hodoog or iaig xpcd ri i ho a ca whr i i ra. P ip, hi chag a haiad o orca w hiorica ri a a or; i ab ar i i or ra. og h coqc i ha i hxd ico a ca, h ri o high id bod ro o pr c. For xd ico a a who, ri ro 9 o prc, ic i grad bod wr ao adjd dowward ro 7 o pr c. hrwi i i worh oig ha xpcdrr o goba qii icrad ro 7 o 9 pr c, whi hir xpcd ri wa owrd ro o pr c.

Wh w a orca, w wor wih -oh apio i ordr o ha a coo i horizo or h poroio ia-io w pror.

eXpected risk and retUrn in tHe neXt 12 mOntHs


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Poroio rag

ASSET CLASS EXPECTATIONS

NEXT

12 MONTHS

REASONING

RETURN RISk

Equities 9% 6% Highr arig ad araci aaio proid good poia. oc o da-a, whr rgig ar (EM) qii ha owr aaio ad br arigpropc ha ho i dopd ar. Erop ha ajor growh poia, wih a o

o rcor raiig, b wi rqir icrad ri appi.Fixed income 4% 6% Sowha owr rr apio or boh high id (HY) ad i grad (G)

bod, b ao ri. W prr HY wih horr draio ad rgig ar db. Gbod carr oo ch pric ri, ad rr o orig bod ar oo ow.

Hedge funds 4% 5% rog r qarr grad high rr. Th choic o rag ad pcia a-agr wihi ach rag i icraig ipora. W prr ar ra ragi aa arai orc o rr or h poroio.

Real estate 6% % Prr o priar ar i rig i owr id ad grar ir ioig rhr o o h ri ca. Goba rcor cobid wih a ow ir rairo poi o a coid ri i raacio o ad icrad a gra-io, pcia i codar ar.

Private equity % % Growig ri appi ha bd id pria qi hrogh icrad raacio

ad a cioig xi ar.

Commodities 5% 5% ixd picr, wih idria a a or r choic dpi h c o cooic -crai. God ha had a aaic pward rid, which i probab ow or. i prodcioi agai i baac ar a wir o rp prodcio. Grai pric wi p aig drogh xpcd ri.

Currencies 4% 5% Moar poici wi dri dop i h orig xchag (FX) ar. Wxpc a rog USD ad a wad PY. Th EUR wi hod i ow, ha o crr ac-co rp. Sorc: SEB

rOlling 36mOntH cOrrelatiOns vs. msci WOrld

-0.8

-0.6

-0.4

-0.2

0

0.2

0.4

0.6

0.8

1

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Fixed income Hedge Real estate

Private equity Commodities Currencies

funds

Hiorica a ar bad o h oowig idic:Eqii = MSC C Word EUR; Fixd ico = P MorgaGoba GB EUR; Hdg d = HFRX Goba Hdg Fd

USD; Ra a = SEB PB Ra Ea EUR; Pria qi =LPX EUR; Coodii = D UBS Coodii TR EUR;Crrci = BarcaHdg Crrc Tradr USD

-5%

0%

5%

10%

15%

20%

25%

2008-11

2009-02

2009-05

2009-08

2009-12

2010-02

2010-05

2010-09

2010-12

2011-02

2011-05

2011-09

2011-12

2012-02

2012-05

2012-08

2012-11

2013-01

2013-04

Equities Fixed income Hedge funds Real estate

Private equity Currencies Commodities

cHanges in OUr retUrn eXpectatiOns

Since the last issue o oo (pub-lished on March 5, 2013) we have made adjust-

ments mainly in expected return in the equities

asset class, which has increased (while risk has

decreased). Private equity also has a somewhathigher expected return, but this will depend on

the markets attitude towards risk.

Sorc: SEB

HistOrical cOrrelatiOn may 31, 2003 tO april 30, 2013

Equities

Fixedinco

me

Hedgefun

ds

Realestat

e

Privateeq

uity

Commodities

Currencies

Equities 1.00

Fixed income -0.3 1.00

Hedge funds 0. -0.32 1.00

Real estate 0. -0.1 0.5 1.00

Private equity 0. -0.32 0.0 0. 1.00

Commodities 0.35 -0.23 0. 0.31 0.2 1.00

Currencies 0.01 0.1 0.1 -0.03 0.02 0.05 1.00

Sorc: SEB

Sorc: SEB


8/35


Poroio rag

th o o w x fou 2013Th goba cooic ooo i poii ad w or a good cod ha ad a good ahad o . hi cario,oc ar wi b dri highr ad ri appi wi grada icra. Thi wi a a ow o capia ro ohr a-

ca io h oc ar i arch o rr. a b h ar o a og-aig poii pha or qii. i owh-o, o ow hh h

Drig h rc priod o wa, oc ar ior ocd o di copai, whi ccica co-pai aggd bhid. Now h ca oc o a growig br o cori ad oc ar cor ha ar ordpd o cooic cc. Th wi ao b ro h praiig ow ir ra.

a qu, u o w of Rc or aiic i Chia ha raid h qio o wha i happig o h growh ra hr, b arigorca ar big adjd pward, ad whr i ia h o i good. xpcd pr i goba radora b h cori, ad apa aggri i progra wi aorab ipac h r o ia.

euo o fo ow , uo, h ecb w o w Erop ha ajor growh poia, wih a o o rcor o co. Poiica adr wi probab o ipo or

ca ari, ad a poii hi i crr acco baac ad grada i prodcii ca b xpcd, b wib popod. Righ ow hr i a ac o good acro daa o boo Eropa ar, b hr ar a idicaioha h wi ariai a ri appi rbod.

bo u o h w uGi or cario o a grada rghig word coo arig hi r, orig bod id i a bro ajor cori ar i o ri, caig bod pric o a. ragic chag or poroio aagr, wih a iicra i h prcag o capia aocad o ch a a hdg d ad r xd ico i ada.

coo o h o, oYid prad agai orig bod rai araci or corpora bod wih owr crdi raig (high id), whipric o corpora bod wih op crdi qai (i grad) ow ha oo ch ri o b araci.

main strategies in OUr pOrtFOliO management

ASSET CLASS WEIGHT* REASONING

Equities 4 5 6 7 h hor r o caio i prrab, b qii ar raoab ad, a-ig ha arig orca pro corrc. br priod or qii wi bid p grad-a, ad cord growh orca ad iprod drig cooic codiiowod icra abii. Sab arig ad ow io h oc ar wi proidgood poia. Th hi ro di o ccica qii wi b i oc, wih iaad rgig ar a h o araci arai.

Fixed income 4 5 6 7 Corpora bod ar prrab, wih high id araci ( ri g wihhorr draio). Coid ow da apio. Pric ri i h igrad g i oo high, ic id prad agai gor crii habco o arrow. Gor bod ar araci, ic ir ra wi opward rapid wh a or poii cooic cario i dicod. Ergig ar

bod ar araci.Hedge funds 4 5 6 7 Th cia or hdg d i ow br, a idcd b or ab rr. W

prr Mar Nra ragi ad ho wih o o qi ri, a w aLog/hor Crdi d.

Real estate 4 5 6 7 Th ar ha ard, b raparc rai ow. W do o crr ha hia ca i or poroio.

Private equity 4 5 6 7 Good cooic growh ad raoab aaio wi proid poia i a ciao icraig ri appi. ca o crai ad high oaii, hi a ca ior r acd ha qii. W ar chooig o o a hi ri i or poro-io righ ow.

Commodities 4 5 6 7 Sci araci, wih idria a a or ai i choic.

Currencies 4 5 6 7 rog ro ar righ ow; ohrwi a o o aio o crrci o ia co-

ri wih rog daa. Foc o h .Sorc: SEB

* Weight shows how we currently view the asset class as a part o a portolio. Level 4 is a neutral situation. These weights

are changed continuously based on our tactical market view and may thus diverge rom our long-term strategic view o an

asset class. At customer level, portolios are individually tailored.


9/35

9

mOdern aggressive wih Modr Growh w ha grada id iqidi,i Modr ggri prad acro a a ca. Hodigar iiar o ho o Modr Growh, b a ca aoca-io i or aggri, wih a xpor o qii o abo4 pr c. Fixd ico ir acco or pr co h ora poroio ( pr c high id ad 8 pr cEM db). Hdg d acco or abo pr c, adchag o aagr ar dr wa hr a w.

ordr o achi i og-r rr arg, h poroioha a argr xpor o ario ri pri ad h ha a

or pro-ccica ar ha Modr Growh, b oa ri icrr owr ha i h oc ar gra.

mOdern grOWtH

Drig h r qarr w had a rai arg cah poiioi Modr Growh a prparaio or a war cod qar-r, b h ooo or ri a i i good, o w grad-a id rp iqidi. W ha icrad qiixpor o abo pr c hrogh Eropa qii (

pr c). Mawhi w ha bood xd ico o 4 prc ro pr c, ai i h or o ir ra rira ragd oa. Th hdg d b-poroio (4pr c) i big rrcrd o achi a br rr pro-, ad chag i aagr ar dr wa. r xporo ia crrci i chagd, whi w ha argiaowrd h har o coodi hodig.

mOdern prOtectiOn

Th oc i i o ir ra ri ra i.Porio o cah hodig, which o qarr ago oadabo pr c o h poroio, ha grada bid. bo pr c o h poroio i aocad obo Rr xd ico aagr, who ha rada ad xibii o a adaag o chagi h id cr, hrb aiaiig ir ra rira xpor. Th high id corpora bod aocaio,which coi ai o hor draio high id bod adragd oa, ha b ppd p o . pr c roh arir . h hdg d b-poroio (abo 8.prc o Modr Procio), a arir w oc o arra ragi or corrad rr ad Crdi Log/Shor i ordr o o h poroio oa crdi ri. Expo-r o ia crrc d ha b argia icrado pr c ro h arir ..


Poroio rag

mOdern investment prOgrammes

allOcatiOn OF capital acrOss seven asset classes at tHree risk levels

7.5%

2%

0%

0%

0%

18.5%

72%

0%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Cash

Currencies

Commodities

Private equity

Real estate

Hedge funds

Fixed income

Equities

Previous Current

6.5%

3.5%

1.5%

0%

0%

24%

34%

30.5%

0% 10% 20% 30% 40%

Cash

Currencies

Commodities

Private equity

Real estate

Hedge funds

Fixed income

Equities

Previous Current

5.5%

0%

2.5%

0%

0%

15.5%

31.5%

45%

0% 10% 20% 30% 40% 50%

Cash

Currencies

Commodities

Private equity

Real estate

Hedge funds

Fixed income

Equities

Previous CurrentSorc: SEB

Sorc: SEB

Sorc: SEB


10/35


th

Stock markets have deed this springs economic

disappointments, climbing largely thanks to central

bank stimulus policies that have pumped a large

quantity o liquidity into the global economy. Li-

quidity also benets economic conditions, and soon

the world should be dominated by higher growth.

La wir hr wr a ig ha boh h ricaad Chi cooi wr poid or accraig growh,whi Eropa cooic codiio d o b ap-proachig abiiaio ar a a dci. B owardh d o h r qarr, aohr picr bga o rg,wh aiic howd ha h dowr i Erop coi-

d ar i ad ha growh i Chia a w a h USwa iad oig o.

Th diappoi d pcaio ha wodao r a igica aoa rra. Th pa hr arha b characrid b ii-cc i h goba cooad oc ar. Th cc ha icdd aggig co-oic growh copd wih idig oc ar drig hprig ad/or r, oowd b cooic ad oc arpwig i h a ad par o h wir. Thi aaoa par i xpaid priari b h rq occr-rc o pcia gai i h cod ad hirdqarr ic .

h prig o h cooic ad acia iaio oGrc prad a chi i h acia word. h prig o a ara diar occrrd i apa, ad ha r hacia prob o Eropa gor (Grc, Spai,a) word, whi h crdi raig o h US gorwa dowgradd. Th ar occrrd d o ifci d-ra bdg ighig ad proracd poiica goiaio iWahigo abo raiig h dra db ciig. h prigo Grc agai prad crai bor i ap c-io i , who oco pod a ri o Grc wihdraw-

ig ro h ro zo. Thi did o happ, ad i pigwih h par i ad , h ar par o wa agood priod boh or h coo ad oc ar.

Th qio ow i whhr h par ro -wi ao prai i .

Bor w gi or awr o hi qio, hr i rao oio r ha oc ar i o par o h word hacoid o cib hi prig, dpi h or dowbacooic iga o rc oh. Ui qi rc, ccicacor ao prord ar or poor ha di cor ioc ar, a idicaio ha ar par ha o bxpcig iprod cooic codiio.

ohr word, ohr acor bid xpcaio o a i-i cooic pwig ha d h oc ar raic a wir. acor i ha h hiorica high ri pr-

i o qii ha bg o a, ic oc ar parow ri ad crai ha bor i hir cooicad poiica cario.

lqu fo h h o uu

ohr, or ipora acor i h prcdd qaio iqidi ha i ow owig arod i h goba coo.Liqidi i o cor o a ir abigo cocp, bi a acrocooic cox i aig i o aociadwih cra ba ad hir acio.

Cra ba oo ca b diidd io coioa ad -

coioa o. Cra ba ha radiioa word oic hor-r ar/o ar ir ra adorigh iqidi i h baig ia chag i (or poic) ir ra ad ar opraio.

Sic h obra o h /8 acia ad cooiccrii, cra ba ha ao rord o a xraordiar ar-ra o oar poic oo ha xpad ad/or chag hrcr o hir baac h (coioa poici).

Ucoioa poici or xap, prcha o gorbod dirc ic og-r ar ir

ra/bod id. For hi rao, owada cra ba ac-io ac h ad p o h ir id cr,hor-r ad og-r. Th o iia cra ba

Liquidity driving marets and the economy


11/35

11

ha cho dir acic, howr. Th US Fdra Rr(Fd) b gor bod ad orgag-bacd crii.Th Ba o Egad (BoE) oc o gor bod. ThEropa Cra Ba (ECB) ha cho aohr pah, ic E-ropa copai obai or ha pr c o hir digia ba, whi a iiar har o dig or rica copa-i occr i h bod ar. ordr o owr h borrowigco o copai, i i h raioa or h Fd o b bodi ordr o p dow ir ra i h bod ar, whih ECB i r ha cho o ac ia ow-co di-roa o h baig . Th oa ar ow big rpaidb h ba a a air rapid pac ad h ECB baac h ihriig, i ha o h Fd, which i growig rapid.

B h Ba o apa (Bo) ha h a-growig baach, ar caaig i a prcha i pri. a aabai, h prcha ar qia o pr c o GDP,copard o h Fd pr c. Th Bo a prcha aopa a ch broadr rag; aid ro gor bod adorgag-bacd crii, h ao icd corpora bod,ra a d ad qii.

Eqii ha appar bco a icraig popar aca i h cra baig word. Toda h cra ba iSwizrad, ra ad h Czch Rpbic ar ao aci abr i h oc ar, ad i a rc r pr c ocra ba a ha h ha ihr bogh or pa o bqii which ca dri oc ar highr.

Th ECB ha ao cho o i codiioa pdg o abod prcha i h ar, id o dig ro h Ero-pa Sabii Mchai, a pra bai-o d. Cocr-

r, dig i dr wa o Grc, rad ad Porga,coio xaid b h Troia (h Eropa Uio, ECBad raioa Moar Fd) ad dibrd ai ia h

Eropa Fiacia Sabii Fd, a porar bai-o d. addiio, h Spaih baig ha b grad oa.

coqc o h arg-ca coioa poiccoi o cra ba ha b ha hir baach ha wo. Thi ad o a icra i h oar

ba (MB). Th MB coi o ba o ad coi (a ra har o MB) ad iqidi rr/rciab ha baha dpoid wih cra ba. B a icra i MB doo aoaica a ha h o pp/iqidi i-cra i a aioa coo. To a hi happ, h ba bgi ig hir iqidi rr or dig o bi- ad hohod. h do cra ba poici haa dirc ipac o h ra coo. h US, hi i aradabo o happ.

Th c o cra ba poici ad ariaio i h iqid-i pp ca b dirc i acia ar. Th poic

ow big ipd ad poib b r a iaiori ad arg id prodcio capaci i characrid ba copio ow o iqidi ro h cra ba pigo adha ) owrd hor-r ar ir ra ad og-rbod id i a cori o rcord ow, ) arrowd idprad bw h prob-pagd ad cor cori oh ro zo, ) arrowd id prad bw corporaad gor bod, a w a bw orgag-bacdad gor bod ad 4) proidd p o o hoc ar.

Th orig xchag ar ha ao b acd, pciab h Ba o apa harp caad i poic, whichha cad h o a rapid i a agai o ohrcrrci. Th coodii ar ao prio bdwh cra ba acd a arg a prchar, b a i-crad pp o coodii, a rogr USD ad a rcra

hi i coodii ( h h aric Nw driig orc ro i o copio") ar ow pig rogi h oppoi dircio.

Falling inFlatiOn Opens liQUidity spigOts

During the past ew years, ination in the industrialised OECD

countries has continued to all, and according to SEBs orecast it

will slow urther in the coming year. Along with plenty o idle pro-

duction resources, this gives central banks room to pursue highly

stimulative monetary policies.

Sorc: Macrobod

cOntinUed massive bOnd pUrcHases by tHe Fed

Aside rom lowering its key interest rate nearly to zero, the US

Federal Reserve has begun its third round o large-scale bond pur-

chases, which are causing its balance sheet to swell. The Fed now

buys a total o USD 85 billion worth o government and mortgage-

backed bonds each month, which is likely to continue at least untilthe end o 2013.

Sorc: Macrobod

Investment OutlOOk - m Ay/June

Th: Liqidi driig ar ad h coo


12/35

12

Th: Liqidi driig ar ad h coo


Cra ba poici ha proid chap o ad rap-id growig acc o iqidi ao idirc ac hcoo ad growh. caic xap i wh owr irra a i araci o a ad or araci oborrow, which a icra hohod copio adcorpora capia pdig h big growh.

ohr iracio bw h acia ar ad hra coo occr ia wah c. Wh cra bapoici a i ow h ca hp riig bod, qiad ho pric, hohod ad corpora wah icra.Thi prab b copio ad capia pdig,rpci. Copai ao a adaag o h hriigid gap bw corpora ad gor bod. Thia i chapr or h o rai d i h bod arad o rrcr hir bod borrowig poroio.

So co bac o or arir qio: Wi h a-oa par ro -, wih a igica cooic adoc ar rra i h prig ad r, ao charac-ri ?

rpiio o hi par wod o rqir a gairiggr o o id. Exap o ha ha aaboagd cooi ad oc ar or a w oh ora ar ar ) gai gor bdg , ) rapidriig iaio ha ha bood ir ra, which i rha owrd bi i i xd capia ad io-ri, ) pcrd pcai bbb, or xap h doco(T/co) bbb i ad b-pri orgag i ,ad 4) h rgc o xci poii cooic xpc-aio copard o wha crr aiic how/wi how.

hi wriig, hr ar o idicaio ha a ch rig-gr ar hidig arod h corr, ihr i h US or i ohriia cooi. addiio, o cor, cooi ad

ar ar big aid b h prcdd ipoici o cra ba, ad b h rpac o ric a-ri i ca poic, pcia i Eropa prob cori,b ar poici. h r, ora ofcia cooicpoici wi h proid or o h ra coo.

r a i h ha h aoa par o rc arha dd ad ha a rahr id cooic owdow drigh prig wi b oowd b grada rogr growh hawi coi io 4. h acro word, hr i ppor orhi cario i h pwig o rc oh i adig ECD

idicaor. h icro word, ccica oc ar cor harc bg o co h gap paraig h ro hirdi corpar. W h bi ha i h ar r,hr i rao o icra ri-aig i qi poroio.

gentle glObal deceleratiOn

Although the pulse o the world economy as

measured by the J.P. Morgan/Markit global

composite purchasing managers index (manu-

acturing and services) has recently slowed,

this deceleration appears to be gentle. In April

the index ended up well above 50, which is the

threshold between expansion and downturn.

Sorc: Macrobod

Riss associated with current central ban policies

Si poici ao ai ri, ch a:

Distortedpricingofcreditandmarketriskswhenthe

wa o iqidi boo pric o riir a, which a

ad o od ri-aig ad pcai bbb. Developmentofzombieeconomies,withcompanies

ad iiio ha wod o ri wiho iqidi p-por, which pr crai drcio i a coo a proc ha a b prodcii ad growh.

Higherinationexpectationsfurtheraheadwhenthe

pp o id prodcio capaci i r o abor adra capia dcra.

Larg og-r qio abo how h proc ohriig gigaic cra ba baac h wi a pac a jor io prio ow oar poic rrior.


13/35


th

A big topic o conversation in the market nowadays is the shit rom bonds to equities. Todays ex-

tremely low government bond yields are not attractive and entail a signiicant risk o a decline in

value i the bonds are long-dated. Equities look increasingly attractive or a number o reasons.

There are also other rather interesting shits to analyse. One is the act that we are probably acing a

cycle not driven by rising commodity prices. It is too early to say with any certainty that we are already

in such a phase, but it is interesting to look at the driving orces behind dierent cycles.

New driving forces from investment to consumption

clear sHiFts in cOmmOdity prices

Commodity prices, illustrated by the CRB

commodity index, show clear shits in levels.

Earlier, we had a long period o uctuations

in line with the general economic trend.

Over the past 15 years, prices have trended

sharply higher with continued uctuations.The trend towards increasingly expensive

commodities may now have ended.

Sorc: Macrobod

Hr w d o oc or aio o o hig. W ar a-ig abo priod o - ar, which xd or a bro bi cc. Wha dri dop orward adwha id o dad do i cra? Thi dad i wha

bq ad o a icra i dir a.Coodii ar o xap o a a ca who priccaio ar crad b rcra chag i dad ordir priod. Pop a abo coodi pric cc.Thi, o cor, do o pr ro haig horr aci-ca cc i rpo o porar chag i dad. Foriac, oda w ca good poia or riig idriaa pric ad or ho prcio a ha ar d i i-dria prodcio, b h ar hor-r o. Thirig i i h og cc. Coidrig ha ior

o d o oo i h rar-iw irror, i i ipora o go h boo o wha dri h cc.

Toda coodi pric ha o oowd har pric pward.W ha a car dcopig bw pric o coodiiad qii, ahogh boh hod rpod poii o arogr coo. Th xpaaio i par i how h ocar ha b propd pward b h arch or rr ia iro o ow bod id, b h awr a aoha or rcra rao.

Th CRB coodi pric idx rachd i pa wo ar agoad ha a abo pr c ic h. Pric ro harp


14/35

14 Investment OutlOOk - mAy/June

Th: Nw driig orc ro i o copio

prior o ha, a how i h char o h prio pag. Thqio i wha phd pric p o harp ad whhr hipar wi b rpad. Th o obio cocio i o co-c h pric ri o h rapid idriaiaio o rgigar. Thr i o dob ha ha i i ara cha irarcr ha dri p coodi pric. Thi ri i

car corrad, or iac, wih dop i Chia.

ch o fo ooWha i h x p? Crr cooic daa ro Chia idi-ca ha capia pdig acco or a igica arprcag o growh, whi copio rai a a high. Thi rd i i i wih ra dir dop.

Th Chi adrhip ha adopd a xpici poic ohiig o or doica-dri dad ad rdcigdpdc o capia pdig ad xpor. Thi i a ad-

iirai poic dciio i Chia, b i rai i i ao aara progrio.

a coo wih riig GDP pr capia, copio pa-r chag. Thr i a dcraig d or capia pdig.Dographic par chag a a coqc o oigor ad d. Fwr chidr ar big bor, adig oowr popaio growh. hr i i Maow hirarcho d ha o b , ad cor dad ha bcoa highr priori a par w ha i r dopigcor, o rc i ia oowig h rapid cooic x-paio o h ad 8.

acor o a io acco i h crr acia iaioarod h word. Drig Chia xpaio pha i 8ad drig h acia crii o 8-, h coo wadri o o x b pbic ac ad a harp xpaioi crdi, which wr d or corcio ad irarcr. h ca o Chia, hi ha d o a had dicio aboh qai o i. Th qio o how o pbicd i a irig o. Thr ar ow car rao o hioward a copio-dri coo, which i Chia caa ha pbic ac wi o b d o ai capia

pdig o h a x a bor. Tha driig orc idiapparig ro h coodii ar. Siiar parar dicrib arod h word. Thr i a gra d or b-ighig i pbic ac ad, whi h pac o ariar ha ad, w ar a og wa ro ig a icrai pbic i a a a o bor h coo. Todah oc iad i o booig copio, pig ir

ra ow ad aig crdi or radi aaiab o copai.So whr wi hi ad? hr cooic cor hod growh iad.

nw w wThi wi ao ha coidrab dirc ipicaio or h

Nordic qii ar. Copai ha wr prio bigwir bca o Chia xpoi growh ca o ogrco o h a boo a bor i h ar o growh hrchag. h ohr had, w a r w ha a codgraio o wir bca o w rd i a br odir idri ch a dica dic, a qip,cor pacagig, proa hgi ad papr pp.

i h h of u o?Th hgr or coodii ro h word rgig ar-, ad h coq rg i coodi pric, rd

i r aorab codiio or coodi prodcr adhir b-coracor drig h . h Nordic qiiar, hi d o a boo or iig copai, oi copaiad a prodcr.

Nowada Chia i ig or pr ihabia ha hUid Sa ad rogh a ch a Gra, dpi a prcapia GDP ha a qarr a arg. a h US, Graad apa or dcad ha had a ao oxi ad ai gai corraio bw cooic growh ad copio, hr i h a car ri/iihood ha rcooic growh i Chia wi o b a coodi-ii

a w ha b accod o or h pa dcad.

mo ouo

o poi, a fci arg br o cor ih word rgig ar wi arad ha achid cha high cooic adard ha h wi o ogr priaridad or car, b iad wi coi o dad highradard o coor ad a. Th a pr hic aicra harp b brigig h adard o a qip,ch a ab, air bag ad croic, o h prai-ig i h W. Th aoobi ar a h icra ig-ica i a wiho a corrpodig ri i copio

o aria.

hr xr good ha a b xpcd o a growhi dad i a iro icraig dri b priacopio ad b capia i icd papr adpaic pacagig. Fiih prodcr o ood pacagig ar


15/35

15

Th: Nw driig orc ro i o copio


arad ig dob-digi aa growh i dad i ia.Swdih aacrr o paraor ad ohr qip oridria prodcio o ood wih high hgi adard wiao b ro highr a o i-ihd good ad aood. growig har o pacagd ood ad copio oproa hgi prodc ad i cod ao a Nordic

prodcr o papr pp or proa hgi prodc raiwir goig orward.

Hh o h

Whi a copio o icra draaica driga rai ar ag o cooic growh, h ow ad d-ci, h par i ao h rr or hah car xpdi-r. h W, h prcag o GDP p o hah carha icrad adi or a dcad. Thr ar a bro w-poiiod ppir o adacd dica dic or

pharacica o h Socho ad Cophag ocxchag ha wi b ro h coid rapid growhi hah car i i ia ad Lai rica og arcoodi copio pr capia ha d o.

i crcia o idi driig orc i ordr o gra rr;

hr ar o r big dirc i how ario ar g- ar dri. Va wi icra, ad o oo wi oppor-ii. Thi i, rogr cooic growh d o ahighr coodi pric.

cHinas ecOnOmic grOWtH previOUsly

pUsHed Up cOmmOdity prices

The price trend in the CRB commodity index is strongly

correlated with the economic trend in China, shown

here as annual percentage change in GDP. In other

words, the sharp rise in commodity prices over the past

decade is closely linked to industrialisation in China as

well as in other emerging markets.

Sorc: Macrobod


16/35

16

m cl

mo u

Global green shoots are now emerging

Stimulative economic policies and lower risks

are providing support

The US is a likely explanation i global

growth exceeds expectations, the euro zone

a probable actor i growth is disappointing

Th word coo i o i wa oward rcorig ha occica orc, rcdig acia ri ad orc cooicpoici, wih cra ba ig w i rcord ad -ca poic bcoig ar. Th growh ra wi gradaicra or h x w ar, b h cooic picr wib dirg. Thi i bca a cooi ar i i rc-io, ad dpi ro poii acor h goba pr irrodd b a dgr o crai.

raioa pric prr ha rc b rpriigow. coid ap pp o id prodcio rorcad dowward prr o wag ad aari ao idicaha h ow-iaio iro wi pri. aio xpc-aio ar ao ow, ad o coodi pric ha aic a wir. h who, hi gi cra ba rooor i ar.

arir, h ri o or ai cario (which ha a pr

c probabii o occrrig) ar ric o h pid addowid ( pr c ach). Th Uid Sa ha coidpoia or pid growh rpri. Th dowid ri arai od i h ro zo, ad o o x ao i Chia.

a o o Th US hoig ar i w o i wa o rcor, adhohod db ha a igica i rc ar, aigh grodwor or rogr pria copio. capiapdig rbod i ao i h card or 4. Drig h xw qarr, howr, growh wi b hd bac b dra caighig, which wi b qia o ar pr c o GDPhi ar. Drig 4 i c wi b ao ra, abig

h US cooic pwig o bco ar or oicab. Wxpc GDP o grow b pr c i ad or ha prc i 4. Bca o hor-r rrai o growh o-

ghr wih dirab high po ad ow iaio,w xpc h Fdra Rr o i crr bod prchaigprogra (USD 8 biio pr oh) coi i h d

o , h bgi phaig i o. Th Fd wi o rai i ir ra ro oda . pr c i h prig o .

d h uo zo owhCrii-hi ro zo cori ha progrd qi ar iiproig hir crr acco baac ad phig dowprodcio co. Y h cori Cpr, Grc, rad,a, Porga ad Spai i ac bbor chag: aigGDP, high bod id ad poiica iabii. Th ro zocooic ooo i oicab ba, pcia d o hproc o adjig baac h. h p id, borrowigco ad oc ri or gor ad ba ha aharp, wih h hp o h Eropa Cra Ba oa o

ba (LTR) ad bod prchaig progra (MT) a wa h ach o h Eropa Sabii Mchai (ESM) bai-o d. W xpc ro zo GDP o dci drig h rha ad bgi growig o a hi ar. GDP wi a b aiad . pr c i ad cib b a iiar ao i4. W prdic ha h ECB wi owr i r ra oc orhi ar, ro . o . pr c.

exo w h bh oThi pa wir, h Uid Kigdo aoidd rcio. ra i ha GDP wi grow b pr c hi ar ad .pr c i 4. Hohod copio i wa ad a-

acrig how o ig o ii pr, o h cood ohr growh gi. Expor appar capab o aigo hi ro, ha o iprod copii. aioha raid rpriig high, hig h door or rhroar i a h o. Thi picr i i ochag wh Mar Car a or a goror o h Bao Egad hi r, hogh h ha idicad ppor orxpaioar oar progra.

no oo Rc cooic iga idica or dirg rd i hNordic rgio. Dpi br copii ha o hwar EUR, Fiad ad Dar (h Daih ro or DKK i

pggd o h ro) ar characrid b cooic agaio,whi doic dad i i a p. brigh po, howr,i ha rapid aig iaio wi icra hohod prcha-

The world is poised for higher growth

Investment OutlOOk - m Ay/June


17/35

17

ig powr. Swd ad pcia i Norwa, h doiccoo i prorig w. Boh cori ha a chac ogrow ar ha h Wr Eropa arag. h Nordicrgio a a who, w prdic ha GDP wi icra b prc hi ar ad or ha pr c i 4.

c J hh- o u?

Drig ad 4 h i poic ow a boic(ar Pri Miir Shizo b) wi proid a poii ijcioo boh h word coo ad apa hrogh highr growh addowward prr o ir ra. apa growh i -4 wi b aid b a war , aig ra ir raad riig wah. Boh pria ad pbic cor copio wiicra, aog wih pria i. W xpc GDP growho arag or ha . pr c hi ar ad x, b hcooic ooo bod 4 i r car. Ca apa opdaio ad achi i pr c iaio arg? Ca gor- db b abiid bor rgig pa pr c o GDP?How wi h cor aag h coqc o a a-agig

popaio? Wha wi happ o acia ior codc iapa? Thr ar a qio, ad or ca b ad.

a oo h Growh i ia rgig cooi owd ar i bwa baia highr ha i h idriaid ECD coriad raid h a i h word. aio ha a i hrgio drig h pa ar, ad hr ar o a ig hapric prr ar o hir wa p. Moar poic ca hrai xpaioar.

h r h qarr o , GDP growh i Chia wa owrha xpcd b i i wih h ofcia arg o . pr c.Copio coribd or o GDP ha capia pdig,which wa i i wih Chia abiio o hi oward cop-io-d growh. r orca i ha GDP wi icra b ar 8pr c hi ar ad . pr c i 4. Coid rapid crdigrowh dpi h cooic owdow wi p h cooicpoici o Chia w adrhip o h . Th cra ba wiprobab hod o o hiig i ir ra i a i .

Th dia coo i poid or a igh pwig, ad w i-a ha GDP wi cib b . pr c i ad 6 pr ci 4. dia arg bdg dci r o ca i, bowr iaio wi ab h cra ba o a ra ir ra c ar hi ar.

l a uw, oo ur a ar owdow, wih growh o ha pr c,Lai rica cooi ar ow gaiig rgh. W or- GDP growh o arod . pr c hi ar ad 4 pr ci 4. h i id, h rgio wi highr iaiora ad crr acco dci who iz wi dpd a o

o wha happ o coodi pric whi ca dci wirai a (o a bi abo pr c o GDP). High iaioi pagig rgia i paricar, b ao Brazi, whi Chi ihowig rog acrocooic gr xcp or i crracco dci.

suh e euo, u b o eUEcooic growh i Ear ad Cra Erop ha boodo, b h rcor wi b ggih. Growh i big haprdb wa Wr Eropa dad, riig poad i ohr par o h rgio ao prr o baig. Mawhi doic dad i big ro b-r dig codiio or gor, copai ad ba

a w a harp ir ra dci. Lowr pric prrad wa growh wi ao pa h wa or cooic iar. B dir par o h rgio ar dirgig. Riaad Poad wi how dc growh i -4, whi hCzch Rpbic, Hgar ad Urai wi ow ipro roarod zro growh hi ar. Croaia ad Soia a ooward aohr rcio ar.

For h hird raigh ar, i w xpc h Baic o bh a-growig cori i h Eropa Uio, drib good doic dad. Expor wi chg aog dpiWr Eropa wa ad Ria owdow. Thi ariaio wi rai bdd i Laia ad Lihaia. wi a

i Eoia, rai rai high. Pbic ac ar drcoro i a hr cori, ad bdg dci wi b ahi ar. W prdic ha Laia wi adop h ro i 4,whi Lihaia a poib do h a i .

th wo o fo hh owhr a priod o grada owr o i -, hword coo i ow poid or highr growh. W or go-ba GDP growh o or ha .6 pr c hi ar ad or ha4 pr c i 4, copard o j or pr c a ar. Thrgig ar phr wi ad h word, wih growh gro abo . pr c aa i -4, whi h ECDcori wi achi a ra o ha . pr c hi ar, b

riig o ar . pr c i 4.

Macro ar


pOsitive ecOnOmic signals being

detected

The OECDs leading indicator (see chart) is now once

again pointing rather steeply upward ater a bumpy ride

in the past several years. Judging rom the SEB Equities

GLEI (Global Leading Economic Indicator) another sharp

jump is in store or the OECD indicator this summer,

probably ollowed by accelerating economic growth inthe OECDs 34 industrialised member countries.Sorc: Macrobod


18/35

18

-5

0

5

10

15

20

25

30

Financials

ITServices

Consumer

Discretionary

Retail

Industrials

Pharmaceuticals

Telecom

Oil&Gas

Commodities

stOck market perFOrmance in stOckHOlm sO Far tHis year

The chart shows stock

market perormance in

per cent so ar this yearin Stockholm, broken

down by sector. Financials

(banks and investment

companies) and IT

(mainly Ericsson) have

driven the upturn, while

cyclically sensitive sectors

such as industrial and

commodity companies

have lagged behind.

Better macroeconomic signals are needed

no qu


Sorc: Boobrg

e h oo ou

Fir qarr rpor o id copai icdd a a arg br o arig diappoi-

, b w bi ha h i proid good rao or opii. dria copai ha gohrogh a roghr pach ha xpcd, b h wor priod i arad pa ad hir rcor wi b ipr-i i o ca.

suo fo w h

Dpi o gai w hadi drig h prig, h oc ar ha cibd. Thi r, hpac o cooic growh a ipro igica.

r fo u x

icoig cooic idicaor ipro hi r i i wih or orca, h idx pr wi bdri b ccica idria copai ha ha a a baig o ar hi ar.


19/35

19

Nordic qii

Investment Out lOOk - mAy/June

better cyclical perFOrmance eXpected tHis sUmmer

-5.0

-3.0

-1.0

1.0

3.0

5.0

7.0

Jan-00

Mar-01

May-02

Jul-03

Sep-04

Nov-05

Jan-07

Mar-08

May-09

Jul-10

Sep-11

Nov-12

ecOnOmic sUrprises

-120

-100

-80

-60

-40

-20

0

20

40

60

80

Jan-08

Jul-08

Jan-09

Jul-09

Jan-10

Jul-10

Jan-11

Jul-11

Jan-12

Jul-12

Jan-13

Sorc: Boobrg

THE STCK MRKET HS PERFRMED STRNGLY o ar hiar, b wih wid dirgc bw cor. Mch o hiar idx gai o h MX Nadaq Socho xchagca aca b xpaid b copai: or ba pErico. Ccica ii cor ch a idria adcoodii ha aggd ar bhid. ipora rao i

xpcd wa cooic growh i h cori ha hadb xpcd o r a gi i h rcor: Chia adh Uid Sa.

Mawhi h oc ar ha jod ppor ro arg-ca oar i ar ad a gra aig ococr ha goba ibaac i gra ad ro zoprob i paricar wi ad o a acia dow i hLha Brohr crii. Thi i o rao wh qii haow ao bg o b acd b xr ow ir ra.Wh a ohr acia a ar hiorica xpi, qi-i wih hiorica ora acia raio appar araci.Bca o h ow rr rqir o bod ad ra a-

, ior ha ow bg o accp owr rr rqir-, ha i, highr aaio o qii a w. hoghw wi rra aog h wa, hi hod gi h ocar coid ppor drig h r o h ar ad po-ib or ar ogr.

W o hoTh r qarr rpor o id copai wrwa, i ha oa arig dcrad ad h prcago copai ha did o i p o aa orca wah high i ra ar, b iiig or o hobraio proid a high icop picr o hi parpor priod. Ba agai dird oid arig, a coi-

d ipro ar a ar hah . dria,which accod or a o h arig diappoiao acco or h io har o h ora ar-o-ardcra i arig. B i a ca, hir rpor a-whi howd car br ha xpcd ordr booig ad

a pr copard o h prcdig qarr. Wa arigwr o a cio o ow diri drig h prcdigqarr, which rd i boh owr a ha xpcd adpoorr capaci iiaio a acori, which i r qzdargi. Wh xd copa co b aocad aoga ar br o i prodcd, proabii oo hri.

a ca, howr, a rapid ad igica iproi ordr booig wa dicrib. Copai i VooTrc ad Scaia rpord a boo o bi raio o .6 ad .,rpci, i h r qarr. Thi a ha ordr boo-ig xcdd diri b 6 ad pr c, rpci. ohr word, i ordr booig rai a hi or hx w qarr, diri wi icra accordig, caigargi o ipro draaica.

To ari, h r qarr o ad h orh qarro probab ard h ow poi o hi arig cc,ad or od cario o a ipro drig h raidro wa rog ppord b h a qarr rpor.

cobiaio o oid arig a ccica iii co-pai ad r ipro a ccica copai idi-ca good chac o rcord arig a ar a 4.

b w fow ou o u ou priod o prdoia pid rpri abo ccica rdi h word ajor cooi ar i wa ddrpacd b oicab wa i March ad pri. abiia-io i ow dicrib, howr, ad hi r w xpca baia ipro i goba cooic prorac.SEB ar Goba Ladig Ecooic dicaor (GLE) igaha a ipro i adig idicaor arod h word cab xpcd b Spbr, ad cooic prorac oo o rgh o i b i ra ar. W biha ch a aorab ow o acro w wi b a pidrpri o a ior ad wi h dri h oc ar highr, d b ccica ii cor.

Sorc: SEB

The chart shows how incoming economic statistics rom the

worlds ten largest economies surprised analysts compared

to consensus expectations. A rising gure indicates that the

percentage o upside surprises was increasing or downside

surprises were decreasing. A level above zero means that

upside surprises had predominated during the preceding

three months, and vice versa.

The chart shows SEBs Global Leading Economic Indicator. GLEI

provides about six months notice o changes that can be expected

in the OECDs leading indicator, which provides an early signal o

global GDP growth. A higher level indicates improved economic

activity and a lower level indicates deteriorating activity.


20/35

20

Higher earnings and attractive valuations

go qu


strOng perFOrmance in maJOr stOck markets

The Japanese stock market has

surged so ar this year (meas-

ured in local currency). However,the yen has weakened, so that

in terms o Swedish kronor or

US dollars the upturn is not

quite as strong. US equities have

perormed unexpectedly well

and share price indices have

reached record levels, despite

mixed messages rom company

quarterly reports and macroeco-

nomic statistics. The worst stock

market trends have been in

Brazil, Russia and parts o Asia.

th wo o ou o

Goba qii ha b rog o ar hi ar, b wih big dirc bw cori. Socar i apa, h US ad Erop ha prord br ha whr i ia ad i rgig

ar. Grar ri appi, highr arig growh ad owr aaio proid a god oppor-i o ci icra EM xpor.

em owh w fErgig ar (EM) oc ar ha prod or ii o hiig iga ro Chia, ad abr o Chi acro diappoi ha probab pd dow hir prorac, b growhi h EM phr wi i b igica ar ha i dopd ar.

g fou o fu h

W or a grar oc o copa daa. Highr arig ad arig ia ha aradjd pward i a goba rcor wi dri oc ar. ia ad EM oc xchag ar io h pac, ha o owr aaio ad br arig propc.

Sorc: Macrobod


21/35

21

THE PSTVE WRLD STCK MRKET TREND coi.So ar hi ar h MSC C Word idx ha ri abo prc i oca crrci. Th dirc bw h ar ah op ad boo ar draaic, wih h apa oc ar- car i r pac wih a pr o ar 48 pr c ioca crrc. h boo ar Brazi, Ria ad Shaghai, a

wih gai rr. gai a odd, US qii ha gaida 8 pr c. Th o poib rao wh h word orapar ar ha rachd rcord ad cod pac ih oc ar raig i ha ior ar crai abo hgoba rcor ad ha ogh prcid ar arai.

dm fo h em xhFor o i, oc xchag i apa, h US ad Eropha oprord ho whr i ia ad i ohrrgig ar. h pa hr oh h ha od i oppoi dircio EM xchag ha awhi Dopd Mar (DM) xchag ha cibd.hogh EM cooic growh rai ar highr ha DM

growh, i dcrad drig h r qarr o .

Toda a EM cooi ar worig a co o axicapaci i r o prodcio rorc (abor, achir adacori). Thi a rahr iid roo or accrad co-oic growh i a pac. Thr ar ri o orhaig ado gai crr acco gr i cori who poicipriorii h doic ar ad pria copio rahr

ha xpor. Ma EM cori ar ao igica coodiprodcr, ad wh coodi pric a hir crr accobaac ar hard hi b dcrad xpor. B hr ar hgcora bw codiio i dir cori. Looigahad, cii wi b h o EM i. DM coo-i, i cora, ha p o id rorc ad ca grow orqi a og i wiho riig highr iaio ad widigcrr acco dci.

Qu o h o x Fir qarr corpora rpor proidd ixd iga.hogh arig wr aiacor, a wr gra diap-poiig. US-bad copai, ar hr o o or rpor-

d r i i wih or br ha xpcaio, b hir co- ad pa or prodcio ad xpor drig h codqarr wr owha wa ad d o dowward adji arig ia.

Copa pro o a goba bai ar xpcd o grow b pr c i ad pr c i 4, wih h EM ooohighr a 6 pr c i . US ad Eropa arig i-a ar pr c highr, whi apa corpora arigar xpcd o grow b 6 pr c. Kora, Taiwa ad Thaiadop EM copai. Chi copai, which rc adjdhir arig ia pward, ar xpcig pr c i-cra i .

Goba qii ar radig a a aggrga pric/arig raioo 4 i orca arig or ad i x ararig. apa, h US ad Hog Kog ar abo h arag,whi Erop i bow. EM qii ar radig a P/E raio o or hi ar, ad Chi qii a a P/E raio o .

Goba qii


Sorc: Macrobod

For some time, stock markets in Japan, the US and Europe have

perormed better than those elsewhere in Asia and in other emerg-

ing markets. EM stock markets have proved more sensitive to shit-

ing signals rom China. A number o Chinese macro disappoint-

ments so ar this year have probably added to this trend. Investors

have sought saer alternatives, mainly the US stock market.

REGION WEIGHT* REASONING

Global 4 5 6 7 Shar aaio ar raoab, proidd ha arig orca pro corrc.Macro daa wr a bi ixd i h r qarr, b h ar ha how r-iic ad rgh. W d o coraio o growh o achi grarabii. Br acro daa, ab arig ad iow o h oc arproid good poia.

Europe 4 5 6 7 Poii cia or xporr, b acro iga ar i oo wa. Gra rco-r poia, b og-r rcra prob; a pr w or o carrig poi. Choo Gra ad Nordic xporr ha b ro a warro ad ha a izab proporio o hir a i rgig ar.

United States 4 5 6 7 Macro daa ha b rai ab, which ha arad rd i a rogar. Vaaio ar bgiig o b high, which wi ii poia.

Asia/EM 4 5 6 7 Priar growh i i ia, wih a oc o dopd corich a doia, Maaia ad Thaiad. oid pr coodi xporr. War acica a bi caio; ri appi ipro.

Japan 4 5 6 7 Th gor i pacag ha d o a oc ar ra ad a harpdci i h crrc. Th ar wi ha a poii ipac o ia a a

who. High arig orca, b ro ow .

* Weight shows how we currently view each asset category as part o a portolio. A level o 4 is neutral. These weights

change continuously based on our tactical view o the stock market and may thus diverge rom our long-term strategic view

o the same asset category.


22/35

22 Investment OutlOOk - mAy/June

s a or poroio, w coi o highigh ia ad rgigar, b wih gra cii. Highr arig growh adowr aaio ar araci. L dopd cori cha Maaia ad Thaiad ha gra poia, b dop- i Chia ar crcia o h ir rgio. So ar i ,

a Chi acro aiic ha b war ha xpc-d, coig h picr o a coo ha i growig orow ha a i . Y rc icrocooic iga co-radic hi picr. Copai i h Nordic cori ad hUS ar ciig highr a ad br ordr booig i Chia.

Th a ipor ad rai a daa ao idica owharogr doic dad i Chia, whi bi i- appar o ha owd. ra, hi wod b coiwih h abiio o Chi ahorii ha growh hodb dri b hohod copio rahr ha b capiapdig ad xpor.

Th poorr prorac o EM oc ar proid a god- big oppori, ic poii daa cobidwih ar goba cooic growh hod dri EM qii ohighr rr ha DM qii drig h cod ha o a w a x ar.

Thr ar ao a rao o coidr Eropa qi-i. Wh ri appi r, w or ajor poia hogh righ ow hr i a ac o fci poiicooic daa o boo h ar. W-aagd i-aioa copai i h Nordic cori ad Gra wib ro a o growig EM cori.

goo o fo o foW ar caio opiiic abo goba oc ar pr-orac, wih good poia or a rog cod ha ad4. Macrocooic daa wr wa drig h r qarro , b h ar ha how good prpard adriic. or ar ow orig ar ri i hircooic ad poiica r cario, which a ha hri pri o qii ha bg o a.

Th ri pri ha b high a a coqc o -crai ad ow xpcaio aog ior aog wihow gor bod id. W or a icrad oc

o copa daa ad araci aaio. Highrarig ad arig ia ha ar adjd pward i agoba rcor wi dri oc ar, wih ccica iicopai, ia ad h EM phr probab adig h waha o owr aaio.

Goba qii


23/35

23

Th Cor Mod i a qaiai crig od. bai-ca coi o a crig o aa orca o h oow-ig acor a copai:

. Earig growh. Earig riio. Rr o qi4. Mar aaio. Diidd

Bhid hi cio o acor i a d corig h ar-, whr h abii o ach acor o proid gid-

ac i chooig har ha b did. acor ha hagrad poii rr ad dorad coii i iprdicabii ha ard a pac i h od. a acor hao grad a rr or ha b oo crai a a idica-or, i ha b xcdd. addiio o h aai o achidiida acor, w ha ao aad iracio bwh acor i h od. wo acor gra xciiiar r, i a ha i o o h i wrog h c-

od i probab wrog a w. For hi rao, gra car hab a o iii h co-ariaio bw ariab ih od.

Th riw icd copai wordwid wih a arcapiaiaio xcdig EUR iio ad oiordb a a ix aa orgaiaio. Copai ar cordrai o ach ohr bad o ach acor, h a acorcor ar addd p o id a oa cor. c corig ido a copa , w cra a cor a cor aa ar-wighd arag o a copai wih h adoici. Th oa cor cor i h d o rah cori.

Qu qu W ha bad h od o oc ar, o acroco-oic. hi wa, w ar br ab o capr h xporri ario ar. Th od i ppd wih qaiaidaa acro a bor adig o rco-daio or bcoig h bai or poroio aocaio dciio.

The Country Model is one o several analytical tools that we use when allocating global equity holdings to various coun-

tries/regions. To obtain a more holistic view, however, we also need to take into account such actors as risk, market

mood, ows and macroeconomic data. Right now China, Indonesia and Russia get top quantitative scores while the

United States, Germany and Sweden are at the lower end.

Goba qii


The Country Model gives China top mars

Cori ha ad o righ ow poii/gai i hCor Mod:

+ China

Th Chi ar rci h high qaiai corbca i ha ow aaio ad copa arig iaha rc b rid pward. Mixd acro iga hahd h ar bac, b h a gr idica rogrcooic growh.

+ Indonesia

doia rci h high cor or rr o qi adarig growh, b a pr w ac a aad aciprodc/d or i i doia.

+ Russia

Th Ria oc ar i h chap i h word adh co o w i h od, b h arig growh o-oo i ow. Ria i a high-ri ar, ad a pr w argra acica caio. Ria dpdc o oi pricdop i r high.

- United States

Th rica ar d p ar dow i h Cor Mod. ha prord w or a og priod bca ior hab crai ad ogh a arai. Vaaio ar

o araci, ad copa arig ar o growig a aa whr i h word. W ar dr-wighig h US i

or poroio ad bi ha i oc ar wi ag bhidh word idx oc h cooic cc rbod ad riappi rr.

- Germany

Gra i ao a h boo o h i. Nihr aaioor arig riio oo pcia araci righ ow.Nrh, i Erop w prr w-aagd Graxporr ha wi b ro iprod cooic acii iia. Earig ia wi h probab b rid pward,ad Gra wi probab d p wih a br raig i hCor Mod.

- Sweden

Li h Gra oc ar, h Swdih ar ao dp r ow i h qaiai od, ic i ha aradprord w ad arig ha b rid dowwardar r qarr rpor. Howr, w a h qaiaia ha Swdih copai, i Gra o, wihod hir ow ic i a goba cooic rcor ad haarig wi h b rid pward.


24/35

24

Fx o


Central bans throw a party

diminisHed eUrO ZOne risks FUel a bOnd rally

Sharply rising government bond yields in the

GIIPS countries in the wake o repeated gov-

ernment nancial crises and political unrest

have been succeeded since the summer o2012 by substantial yield declines/price gains

or those countries bonds (10-year govern-

ment bond yields in the chart). Among the

actors behind this are decreasing nancial

risks thanks to the European Central Banks

OMT bond purchase programme, progress in

these countries crisis management policies

and the Bank o Japans expanded stimulus

measures, which have increased the appetite

or high yield bonds around the world.

b fo u of o

Er ic h prcdd acia ad cooic crii o 7-9, cra ba poic ha b o-cd o borig acia ad cooi. Th i ar ow big achd hod b i igh o wa growh ad ow iaio i a cori.

no o o wh o

Bca h word acia ar ad cooi ar ow iia irwo, h acio o adigcra ba rrbra acro h gob. Th a xap o hi i racio i h goba o ad cr-rc ar o h Ba o apa iid i poic.

Fw of h o o o

Thr ar icraig w opporii or xd ico d aagr o gra high rr, which iwh prorac xpcaio or xd ico poroio d o b owrd. Propc oo brigh orpar o h high id ar ad rgig ar (EM) db.

Sorc: Macrobod


25/35

25

Fixd ico


N ERLY 2013, YELDS N MNY CUNTRES gorbod ro, arg i rpo o rog iga ro ariocorr o h acrocooic word, b ao d o caa-ig poiica ri. Howr, oward h d o h r qar-r, bod id o a broad ro or a br o rao.Growh daa i Erop a w a i h US ad Chia bga o

wa. Poiica ri i h ro zo ad ar a agr- o how o aag h cooic crii i Cpr whia wor i a w gor d b Erico La ar awi ad r. Th Ba o apa (Bo) ao achd arpriig arg oar i pacag ocd o do-big oh a prcha.

ar Ma, a arg grop o cra ba hrw a ipar arig ir ra c o h . Th ho ar hEropa Cra Ba (ECB) ad h cra ba o Dar,Poad, raia, dia, Soh Kora ad Via. Thi radi-ioa oar poic, cobid wih h US Fdra Rrcoid bod prcha ad h Bo xpadd a

prcha wo xap o coioa qaiai o-ar poic ai oar i or h goba cooo a ca rar bor. Thi i bcia o a aciaar a w a h goba coo ( ao h h ari-c Liqidi driig ar ad h coo).

Th bgiig o h cod qarr wa h doiad baig id o gor bod i h ECD cori,o rgig ar bod ad o i grad (G) adhigh id (HY) corpora bod. pri ad ar Ma wr ha r cc priod or bod ior.

og h acor bhid h ir hi prig i corporabod ad gor bod i h GPS cori (Grc,rad, a, Porga ad Spai) wa h gigaic qaiaiaig i h Bo oar poic, which owrd bod id/raid bod pric coidrab i apa. Tha i r cadpria apa bod ior o ar ooig or highr bodid whr i h word. Expcaio ha hi wod hap-p ao cad ohr ar par o qic o highid cori ad h corpora bod ar, coribig

gra o h id dcra/pric icra i h ar.

B a idicaio, h priod o aig gor bodid i cor cori ch a h US, h UK, Gra adSwd i a a d. rao i ha h acia ar,i or iw, ha b xci piiic abo cooicpropc. Thi goo ood wa rcd i US ad Gra

-ar bod id, which dcid o ar rcord-ow i ar Ma a w a i di oc, which ar opr-ord ccica oc or qi o i. Gi or carioo a grada rghig o h goba coo arig hir, i a iihood gor bod id wi ri/pric- wi a or cor cori goig orward, abi od,ha o aid ow iaio ad cra ba ar.

Mawhi, hr i roo or igh owr id/highrpric i o g o h corpora bod ar. Thoorig ch opporii ar h ri par o high id(wih a BB or B crdi raig). riir g ch a CCC,

id ha a igica hi prig, which i wh pricad aaio ha bco raid. Howr, rig idha ar i rai high ar a poii acor i h g-. h ohr d o h ar i grad hid gap o gor crii ha arrowd o ch hahr i a highr ri o ior big hi b aig bod pric.

Ergig ar (EM) db rai araci. For iorbad i h ECD cori, hr ar opporii or agrowh i oca crrci a w a growh a a r o ap-prciaig EM crrci. Hiorica, oa a growh i EMbod ha b 4 pr c aribab o rr ardi oca crrci ad abo 6 pr c aribab o ap-

prciaig crrci.

Nor hod i b rd o ha gor bod i hGPS cori a gra good rr or a i whiogr. Howr, o a air arg x, h poii co rdcd poiica ad acia ri i h ro zo adh arch or rr b apa ad ohr ior hodha arad hir ar i h bod ar.

asset class WeigHt* eXpected retUrn neXt mOntHs risksek eUr

Trar bi 7 0.% 0.0% 0.1%

Gor bod 7 -1.2% -1.1% .5%

gradcorpora bod

7 2.3% 1.3% 3.%

High id corpora bod 5 7 .3% .2% 5.%

Ergig ar db 5 7 11.0% 1.0% .%

Sorc: SEB* Weight indicates how we currently view the asset class as part o our portolio. Level 4 is neutral. These weights change

continuously depending on our tactical market outlook and may thereore difer rom our long-term strategic outlook or the

asset class.


26/35

26

H fu


More stable marets, better opportunities

strOng perFOrmance trend cOntinUes in 2013

Almost every strategy contin-

ued its strong ourth quarter

trend, with the exception o

Macro/CTA, which hovered

around zero. There is still

good potential or every

strategy, although the rate o

return will probably not be as

high or the rest o the year.

95

100

105

110

115

2011-12

2012-01

2012-02

2012-03

2012-04

2012-05

2012-06

2012-07

2012-08

2012-09

2012-10

2012-11

2012-12

2013-01

2013-02

2013-03

2013-04

HFRX Global Hedge Fund Index HFRX Equity Hedge Index HFRX Relative Value Arbitrage

HFRX Event Driven Index HFRX Macro/CTA Index

i Q1, h fu u wh fu- 2012

Sic h orh qarr o , h ar ha grada rrd o big gord b copa ad ac-

rocooic daa, which ha b a good cia or hdg d aagr. Hdg d a a whoha had a good ar o h ar, graig . pr c drig h r qarr, copard o a -ar rro . pr c or .

vo wh w

Eqi Log/Shor ad E Dri ragi ha bd o ro or oraid ar codiio,wih gai o or pr c hi ar. Mawhi, Macro/CT ha ad j abo zro, which i owr ha wxpcd, b hr i coidrab ariaio aog hdg d aagr.

s oo o fo

Mor aid rd hod aor CT (ragi bad o ahaica od), whi arg goba iba-ac cra opporii or boh Rai Va ad Macro ragi. Mar par growig oc o co-pa daa bod w or Eqi L/S, whi copai arg cah hodig ca b d or acqiiio,which hod aor E Dri ad Dird ragi i paricar.

Sorc: Macrobod


27/35


Hdg d

STRATEGY INDEX PERFORMANCE % (USD)

Q2 2013

TO DATE

Q1 2013 2012 2011 2010

Goba Hdg HFRX Goba Hdg Fd 0. 3.1 3.5 -. 5.2

Eqi Hdg HFRX Eqi Hdg 1.1 5.1 . -1.1 .

Rai Va HFRX Rai Va rbirag 0. 1. 3. -.0 .

E Dri HFRX E Dri 1.5 5.3 .0 -. 2.0

Macro HFRX Macro 0.3 0.0 -1.0 -. -1.

Sorc: SEB

THE FRST QURTER F 2013 SW PSTVE raiioro a ar, a h HFRX E Dri ad HFRX EqiHdg idic d h wa wih gai o . ad . pr c,rpci, baica qia o h -ar rror h ragi. HFRX Macro/CT agai had h worprorac hi qarr, rdig argia abo zro. Th

broadr HFRX Goba Hdg Fd dx dd h qarr p. pr c, ad r rag rd i a poii pror-ac i pri.

Equity Long/Short had a r rog r qarr dpio rbc i h ro zo, wih Cpr ad a adigh wa. Fdaa codiio a h acro ha i-prod, ad d aagr wr ab o icra hir x-por i hir poroio. ig ha daa oc pic-ig ha word i ha ar-ra ragi ha ao d-ird i i wih xpcaio. h a i o InvestmentOutlook(pbihd March , ), w argd ha wodproid br codiio or hi rag ad w ar icig

o hi. Uora, w ha o h Gra Roaioro a gor bod o riir a ch a qii(ahogh i ha bg). Yid ha b phd dow rhrb cra ba acio, ai h apa i pacagha ha dri capia o o apa i arch o highr idad o proc agai a aig .

r h oc ar ra, a hdg d aagr ooho pro ad adjd hir xpor dowward, ichr wa a icrad ri o a porar corrcio. Thar ooig or igh owr o jp bac i, ad gih ajor ibaac ha i prai i h word, oppori-

i ar i o ari. W hror i ha a prrc orcapia-procio aagr b do o id i h ha aor ccica xpor i hir poroio.

Relative Value had a good r qarr, wih a gai o .pr c. Th rahr draaic chag i apa oarpoic ad cor oiorig o iga ha h US FdraRr a p a d o i i ar p daagr occpid. Th arch or rr coi,wih id o a gor bod i a xr ow hiorica.

Ma aagr ha b ab o dop biggr radigragi wih boh hor ad og poiio, which ha po-ia o corib poii o rr. Thi wa ar or

difc a ar, d o rai highr ir co adhighr oaii. W ar i poii abo hi rag, p-cia or Fixd co Rai Va ad Crdi Log/Shor.

Event Driven ro . pr c drig h r qarr o, aig i h b-prorig rag (iiar o a

ar prorac). Mrgr rbirag had a rahr odgai o . pr c. Si, aagr ocd o pcia ia-io, ai i crdi, had br cc. Wihi Dirdragi, hdg d ha ard o bid p a ighargr cah poiio i ordr o b a br pric whhr i rbc, ohig w aw ra i i rcar. h a i o Investment Outlook, w argd hah codiio or icrad acii i corpora acqiiiohad iprod, which wod rog aor hi rag. Th o acii h ar ha b ow i r o ajor da.Whi awaiig aciii b ajor corporaio, hr o b ogh ar-ca raacio ad pcia ia-io or a aagr, who ar graig rr i boh

Dird ad E Dri ragi. For ior wihowr dad or iqidi ad ogr i horizo,hr hod i b good rr poia.

Macro and Trading had a wa ar o h ar. HFRXMacro/CT ro .4 pr c i h r qarr. Th HFRXSaic Dirid CT dx wa war, aig.8 pr c drig h a priod. Th goba iaio ii ar ro ab. Th ajor cooi ar i i dirag o rcor, wih h US i a iaio whr iar a b rid i, whra apa ha j achda powr i pacag, Chia i rig o r i

coo oward or cor-dri growh, ad rozo poiica adr ar agihig bw bdg c adgrowh i. hi iro, crrci, coodiiad xd ico ir hod b o acd. Thahod cra good opporii. Maagr who ha borcd o oc hir radig o ri i i rc arow ha grar opporii o rad bad o di-r daa rd ahogh i i i ia o b qic oo . For or CT d, w or a grada ipro-. Said rog rd ar i ohig o a rari,b owr corraio aow od o bid p poiio iwhich rd dop, wiho qic rachig h ragri ii. W ad b h poii qaii o h poroiowih hi rag ad ar pad wih h poii rr orcd i ha grad o ar hi ar.


28/35


Rl

Increased ris-taing favours secondary marets

transactiOn vOlUme is eXpected tO increase 1015 per cent tHis year

The rst quarter has historically

been characterised by lower activity,

which is also apparent this year.

However, compared to the rst quar-

ter o last year, the global transac-

tion volume was up 20 per cent.0

20

40

60

80

100

120

140

160

Q108

Q308

Q109

Q309

Q110

Q310

Q111

Q311

Q112

Q312

Q113

USD

Billion

Hh o ou h x

Th goba icra i o drig h r qarr poi o growh o - pr c or h -ar .

Hh ow o w fo

Th ar ha gra codc i h word ajor cra ba, which ar proiig coid iar ad ow ir ra. Ra a, aog wih ohr arai a ca, wi b a icraigipora orc o rr.

low

Prr i h priar ar ha coribd o owr id ad iga a coid growig ir icodar ar.

Sorc: Macrobod


29/35

29

Ra a


N THE LST SSUE F INVESTMENT OUTLOOK(pbihdMarch , ), w dcribd how h high raacio o- i h goba propr ar drig h orh qarro cod idica a rd hi. Th r qarr ha hi-orica b characrid b owr acii, which craiwa h ca i a w. Th goba raacio o

drig h r qarr wa pr c owr ha drig ha qarr o , b pr c highr copard o hr qarr o . Th oa o or -ar i owxpcd o grow o pr c copard o .

or i ha rghd dpi boh poiicaad cooic crai acor. Toghr wih highr haxpcd raacio o, hi ha rd i a aidrog rd i h goba propr ar. Th goba RET i-dx (GPR RET) i p pr c ic h r o h arad 4 pr c or h pa ar.

Goba GDP growh or i xpcd o b bow rd,

ad harp pric o idica ha h ar ha owxpcaio. Dpi a br o poiica ad cooicchag, ior icraig agr o o rhro o h ri ca i h arch or rr. h ra aar, priar ar wih a b ow rr poiaha og b i dad, b icrad acii i ow ap-par i codar ar, wih ar or araci r ad rr poia.

Coid ar b ajor cra ba wi b h raa ar. Hiorica ow ir ra ar xpcd ohod or a whi, ad qaiai aig coi o proid

h ar wih iqidi. Th ac o ri-r rr coio arac ior o arai a ca ha i-craig appaig. iioa ior ch a gorpio d ha p o capia ha rqir a rr, ada car rd ca ow b oward icrad ri orac.

crad prr i h propr ar ha d o highrpric ad h highr oa-o-a , coribig oowr id i o ar. Said ir wi probabad o rhr a icra whi id hod a igh. i h i ha ior wi coi o o rhr oo h ri ca, wih a br o codar ar orig

good rr poia.

Th ar, h Nordic ar ha b air iad roh cooic ad poiica iabii ha ha doiad hro zo, or iac. h Nordic rgio, h hr argcii i Swd a w a o, Norwa ha how rogrriac ha Hii, Fiad ad Cophag, Dar,whr h iaio i a bi oghr. Swd ad Norwa, i-or oc ha b ai o priar ar. Scodarar oid h ci cr ha bco o aba ha ighd hir dig rqir. Howr, r-r ha ood hir grod, which i ao a rd hai xpcd o coi or h x ar.

Th US hoig ar i coidrd b a o b a i-pora idicaor o h cor cooic rcor. ThNaioa ociaio o Ho Bidr/W Fargo HoigMar dx, a oh ar o crr ad r i- i h US hoig ar, ha how ha codcha ward owha ic Fbrar a a r o riigcorcio co ad abor pp cocr. Howr,poii po gr ad aoc ro hFdra Rr abo coid i ar poi oa rcor. coid goba rcor cobid wih a -aid ow ir ra iro bod w or a highr

raacio o ad icrad a graio, ai icodar ar.

Wavering cOnFidence in tHe Us HOUsing market

This spring, the global REIT index has con-

tinued to perorm well, but condence in the

US housing market has started to waver a bit

ater a long period o strength.600

650

700

750

800

850

A

pr-12

M

ay-12

J

un-12

Jul-12

A

ug-12

S

ep-12

Oct-12

N

ov-12

D

ec-12

Jan-13

F

eb-13

M

ar-13

A

pr-13

20

25

30

35

40

45

50

GPR 250 REIT Index US NAHB Index

Sorc: Macrobod


30/35

30

p qu


Still good potential for listed private equity

strOng, steady trend Over tHe past year

Listed private equity (PE)

rms, like many other risk

assets, have turned in a

strong perormance over

the past year. In local cur-

rencies, the index or listed

PE (LPX50 Total Return) is

up 52 per cent. The broad

index or nancial equities

(S&P 500 Financial Sector

Index) is up 45 per cent and

MSCI World is up 28 per

cent, all in local currencies.80

90

100

110

120

130

140

150

160

12-05-21

12-06-20

12-07-20

12-08-19

12-09-18

12-10-18

12-11-17

12-12-17

13-01-16

13-02-15

13-03-17

13-04-16

13-05-16

LPX50TR Index S&P Financials MSCI World LOC

low o fou qu

Hiorica ow db ad ow ir ra corib o high diidd id ad owr gra ri.

so o

Growig ri appi ha bd id pria qi hrogh icrad raacio, ad a cioigxi ar i hpig proid w opporii o ar prorac .

bo ofoo u o

Larg pria qi r oda ar chooig o broad hir poroio o icd ohr a ca i ordro coi growig ad o icra hir diricaio.

Sorc: Boobrg


31/35


Pria qi

FTER RSK PPETTE MNG MRKET PLYERS picd phi prig, o ar ha crp i ha a db bbb i ho w aw i i bidig p. Howr, pric o idpria qi (PE) copai ar i owr ha i ,ad o ipora, copa db raio ar ch owr.Cobid wih ow ir co, owr db raio a

rogh pr c owr crdi co or copai. Thowr db raio ao corib o gra owr ri. Thhigh har o qi rai o high arig ad ow crdico a ha w ar crr ig hiorica high dii-dd id .

Low crdi co ao aor w raacio bad o hpricip ha h crr ow ri-r ir ra aracior o ri a. h a i o Investment Outlook(pbihd March , ) w dcribd how h icradri appi a a coid o grow ar i . Thirog ri appi ha prid wih a w xcpio drigh prig, which ha ao coribd o icrad raacio.

i h x Rdcd crai ha ad i air or r ad bro agr o a coig raacio pric, which i a iarqir or PE copai o cah o o or xi hir i-. Th xi ar oda i rog, ad w ar iga rd oward wha i ow a diidd rcapiaiaio,which wa pcia id drig h a qarr o .Diidd rcapiaiaio a ha a PE copa icrai ow db raio ad ha capia o pa diidd oharhodr, oc i ha paid dow o or a o i db i aporoio copa. pracic, hi ai a hi i ri-aig

ro h poroio copa o h PE copa. Th capiaow grad hrogh hi procdr ar aohr raowh h xi ar ha go bac o i agai.

Th ri i xi acii ha hpd ab PE copai oa o prorac . Ma cc i hadb ocd i drig i o icrad crai, wih-o a oppori or PE copai o charg or ha h had grad. Rc, d wih xpor o PEcopai ha bd ro icrad capia ow d oprorac .

widprad og-r rd i h oc ar i di-riig a copa drig xpor o ia hrogh

Eropa xpor copai. Siiar rd ca b dicrdi h PE ar, wih PE copai ab o b rogrowh i h ia ar b acqirig Eropa xporcopai. Ma PE copai, gi hir xpri, caao dop h poroio copai hrogh xpaioo w xpor ar, hrb hpig h copai o

achi highr rr.

low ou o nav a br o occaio, w ha dcribd how PE copa-i ha a proaci p o owr high dico o a a (NV). h codar ar, h dico ari owr ha or id PE, b h gap ha arrowd o-wha ha o h rog prorac o id PE. crador o rdc dico o NV, oghr wih a rgh-ig o h drig NV, ha coribd o owr dico.Th arag dico or id PE oda i arod pr c,copard o abo pr c i 8. Lowr dico o NVicra h raparc o a grad i h drig

poroio copai ad hp ipro h ior coigra iw o hi a ca.

br o w-ow PE copai ha cho o x-pad hir poroio a hir capia grow ad i i abr o dir a ca, ch a hdg d, raa ad ario p o db. Rpoibii go had ihad wih iz, ad i a ca i a b difc or argd o d araci poroio copai wih h righ izo i i. Expadd poroio aag ab PE co-pai o coi accpig w capia, whi grar dir-icaio i hir oa capia ba hp o rdc oaii.

Thr i i coidrab ir i pcia iaio i-. Spcia iaio io PE copai idiigrab copai whr hr i poia o r arodopraig proabii ad h a hahir poroio co-pa a a highr pric. Drig h prig, hi p o i- ha coid o b a rog acor coribig o hpoii rd w ha or h p o d.

Wih icrad ri appi, h aid aorab dr-ig rd ad a rog xi ar bod w or id priaqi.


32/35


Golds glittering era is over

coo

metal prices and eQUities in cHina gO tHeir separate Ways

Cyclically sensitive commodities

such as industrial metals and oil

have not perormed as well as

global equities this year. Their

correlation with emerging market

stock markets has been much

stronger, which is logical since

these countries consume the bulk

o global production. The chart

shows how Chinese equities,

global equities and metal prices

trended together early in 2013

but then went in diferent direc-

tions beginning in mid-February.

However, recently we have seen

hopeul signs o a rebound.

exo of oo owh h

Sig o a iprod goba coo id coodi pric drig h cod ha o . Howr, hiar, o ic id-Fbrar, pric ha pd. Ucrai abo h dircio o h goba coo,ad Chia i paricar, ha wighd dow h ar.

i

Exc pp i h oi ar hi prig a had a ipac o pric. Th ar i ow i br baac,ad w xpc igh highr pric goig orward.

io xo wh o o h h u

God og pric r-p dd i pri ad i o i or hi i arod. r pric ri o abo pr c i h r dcad o hi cr, w xpc owr pric goig orward iaioxpcaio rg.

Sorc: Macrobod


33/35

33

THE PRCE TREND FR NDUSTRL METLS ha brog acd b icrad cooic crai hiprig, arg a a r o diappoi ro Chia. Thcooic iaio i Chia i ar or ab ha a arago, b rc aiic idica igh war proracha xpcd. Thi crai i ao rcd aog gobaaacrr, which ar aiaiig ow a iori.

Drig h r qarr o hi ar, h ior bid-p g-r wa h ow ic .

Cobid wih coid wa dad ro Erop, growhi dad ha b or od ha xpcd whi p-pi ha cagh p. rcapaci ad riig ior ,wih aig pric a a r, ha h doiad h picror a whi. W bi ha h goba cooic rcor wicoi ad ha Chia GDP wi grow b ao 8 pr chi ar. B id-, h oc wi ao b or o 4,which hod hp ai h ar. or iw, pric haow a oo ar, ad w xpc highr pric a ar roow. Th Lodo Ma Exchag idx i co o i ow- ic , ad a br o a, icdig icad aii, ar radig a pric w bow hir argiaprodcio co.

ex u h , u ow oTh crd oi ar ard h ar rog, ahogh x-i rr aiac wor arod h word d owar dad. Th pp ro o-PEC cori aoicrad ar ha xpcd, par bca prodcioi cori i Sda ad Liba ca bac o i arirha orca. Th codiio ar a o b owrPEC prodcio, b h orgaiaio ad o ior

c, ad pp wa abo a iio barr pr da highrha dad drig h r qarr, a iaio ha hodha wighd pric dow. Howr, or poii ari a h ar o h ar had a grar ipac, adh pric o oi (Br) cibd oward USD /barr iid-Fbrar. B rai cagh p ad oi pric raiqic, o j dr USD /barr a hir ow. Rriha ihd hir aiac, ad i or iw h oi ar- i ow rai baacd. W xpc oi (Br) o radarod USD /barr a ar ro ow. og h acorwih poia o chag hi picr i h rapid ri i Norhrica prodcio (ha oi), which rdc US ipor

d ad i grada chagig goba oi ow. ohr ac-or i whhr h izab oi rr ocd i b ariogopoiica coic (Y, Sria ad ra) wi rr o har. Howr, w do o xpc pric ch bow USD/barr i ch a cario xcp or hor priod, ico PEC cori d oi o rad a arod USD /barr o ha a baacd bdg.

no u ouo our h xraordiar ri i god pric ic (+6pr c) ad a a rd or abo wo ar, god oo aabrp r i pri, wih pric aig harp. Th riggr wao i h arg capia oow ro phica iprodc, which wr dri par b or opiiic xpc-aio abo rr o ohr a ca. La ar, ho o hi p o i prodc rpad ,6o, which i qia o o ar iig prodcio. or iw, god pric ar i oo high iaio xpca-io rg. Howr, w rai poii abo h hbrida pai ad paadi, ic h ar d o a

arg x i hic aacr. Pric o h aha rdd dowward o o x aog wih god pric-, which w bi i raoab. For iac, or cho h (i h r o 8), pai radd aabo wic h pric o god. Toda, h pric o pai io argia highr ha ha o god. W bi ha a r-r o h prio pric raiohip i o i.

a of ouh hou o h Grai pric ha coid o a ro hir xcpioahigh drig h r o . Thr wa a pa ih pric drop drig h r qarr, wih h ar wai-ig o wha h poia i or hi ar US har.Exr dr codiio hi pa wir a ha hr i aajor ri o dirpio i pp. Howr, h iaio haiprod i rc oh, ad ajor aiz (cor) ad oaba prodcig rgio ar o ogr acd b drogh.Thr i i crai, b pric hod ha rhr dow-id poia aig cc US har. Grai pricar high ad i or iw, gi ora wahr codiio,h hod a rhr. Howr, drogh cod qic rrwih h poia o wip o ch o h har, r-ig i pp dirpio ad pric hi.


Coodii

ASSET CLASS WEIGHT* REASONING

Energy 4 5 6 7 r xc pp i h oi ar hi prig, w or a or baacd argoig orward ad igh highr oi pric.

Industrial metals 4 5 6 7 Ecooic crai, pcia abo Chia, ha wighd dow a pric or awhi. or iw, pric ha ow a oo ar ad w xpc highr pric drigh cod ha o .

Precious metals 4 5 6 7 r a pr c pric cib, god ha ow bg i dc. Dpi h rcpric drop, i or iw, god i i oo xpi. Howr, w bi pai ad pa-adi ar araci a ic h b o prodcio i d i h hic idr.

Agriculturalproducts

4 5 6 7 Grai pric ha a ic a r, ad w xpc h wi coi o dropproidd ha hr i o draaic drioraio i wahr codiio i agric-ra rgio.

* Weight indicates how we currently view the asset class as part o our portolio. Level 4 is neutral. These weights change continuously

depending on our tactical market outlook and may thereore difer rom our long-term strategic outlook or the asset class.


34/35


cu

FX maret in the hands of central baners

central banks taking diFFerent apprOacHes On cUrrencies

Economic policymakers in the USare taking a rather wait-and-see

approach to the US dollars perorm-

ance since exports are o little im-

portance to the American economy.

According to SEBs currency analysts,

the USD is undervalued. The Federal

Reserve is ocusing mainly on labour

market developments. In contrast,

the Bank o Japan is pursuing a very

active, aggressive currency policy,

primarily aimed at leaving deation

behind or good and achieving ina-

tion o 2 per cent.

mo o o h fo xh (FX)

Hiorica ow ir ra, ai cra ba bod prcha ad i o ca acacrrc irio ha ho h poigh o oar poic a r bor. a ocra ba acio i hror o ia iporac i xchag ra orca.

Usd h

Th o ipora arg aorig a rogr USD i ha h wh o h rica cooha bg piig ar, wih riig ho pric ad aig po adig h wa. po-ia ighig i h Fdra Rr qaiai aig poic i wod ao hp rgh hUSD.

J h o o

Th apa gor ad cra ba ar drid o o o daio ad rr h owdrioraio i h cor coo. B i i rig o. o h o ipora p b arha b o r o brig dow h a o h PY. Frhr dprciaio i i.

Sorc: SEB

CENTRAL BANk

ATTITUDE

FOCUSING ON CURRENCY VALUATION

FED Raxd Upo USD UdradECB Raxd CP EUR Fair

BOJ ggri CP PY Fair

BOE Raxd CP GBP Fair

SNB ggri EUR/CHF 1.20 CHF rad

RBA Cocrd ToT/CP UD rad

RBNZ Cocrd Trad baac NZD rad

PBOC Cocrd Expor o US CNY rad

RIX Cocrd pord CP SEK Fair

NB ggri pord CP NK Fair


35/35

Crrci

S FR THS YER, THE FREGN EXCHNGE MRKET hab characrid b a rghig o crrci i priph-ra cori, ch a coodi xporr raia ad NwZaad ad h Scadiaia cori, a h xp o hajor crrci, which prio ord a ad iqidi.

Qaiai aig b h apa ad US cra baoaig o USD biio a oh i aig i wa iow-aagd ar cooi, who crrci ar ap-prciaig a a r. Sch ow ha d xporr i hocori o ar copaiig, pig prr o hircra ba o ip or coidr ir ra c. B h argr cra ba ch a d, a iradb h Eropa Cra Ba cig i ai r ra b. prcag poi i ar Ma, wih accopaigiga ha hr cod b rhr rdcio. Swd, hRiba hid b owrig i ir ra orca i priha i rpo ra cod b c a h x oar poicig i ar . Howr, w bi h Norwgia c-

ra ba wi aiai i bchar ir ra a h cr-r i h r o 4. or iw, h c oh ar cod iiga h pward rd or h EURad SEK, whi h NK cod rgh ic h irra prad o ohr crrci i icraig.

Thi i h ixh raigh ar o oo oar poic i argpar o h word. Th Ba o apa ( Bo) i h a ado orc par o h ag. Pri Miir Shizo bha abihd hr poic oc ara o ac h corcoidrab cooic prob: ) orc ca iar, ) a high aggri oar poic dr h

Bo w goror, Harhio Kroda, who a i o rror ha a dcad o daio ad a pr c ia-io arg wihi wo ar, arg b a o a dobigo h Bo oar ba, ad ) a horogh rrcrigo h coo, which hod rh a a air ogi. Noh, apa ha achd goiaio, or i-ac i h agricra cor, o g rrcrig arad cooic ror dr wa.

Th c o apa poic w ha i h ar o arar owr ar ir ra i priphra cori ch araia, Nw Zaad ad Caada a w a i Scadiaia.apa acia iiio ha h doic aro highr rr o xd ico i abroad.Thi ha ao acd h PY, which ha wad coidr-ab ic a .

ccordig o SEB orca, h PY wi wa agai hUSD, rachig ar o h doar i h og r.Howr hi i o w or aiiar rrior or h USD/PYxchag ra. Th crrc pair radd a or abo ha o rc i 8, ad . Th c o apaxpici oar poic ha o b og i coig. ThNii har pric idx ha ri ao 48 pr c o arhi ar cacad i oca crrc, which how ha xpc-

aio ar r high ha b poici wi ccd.

Erop coi o wr wih h pcr o rcio.Ladig idicaor ar crr i war ha orca, adh ro zo coo wi rai ragi hi r adar a. No rcor rd i xpcd i oward horh qarr o hi ar.

Dpi ajor cooic difci h EUR ha ard w iorig xchag ar rc, ha o crr accorp ad iprod codc i ofcia cooic poic

ar o aag h crii. Thi i prhap o appari h waig o h CHF, a rd ha i xpcd o co-i. Th Swi Naioa Ba ao r a garaor hah CHF wi o apprcia abo . agai h EUR.

h rgig ar cori, SEB i aig a wai-ad-approach o h Ria rob, RUB. og ohr acor,h Ria coo i b qzd b aig coodipric, ad h Miir or Ecooic Dop rcowrd i orca or Ria GDP growh i ro .6o .4 pr c.

Th oro iqidi ow coig ro apa ad h USha o o x od hir wa o Tr, a cor haor high rr ad a coo o h ri. Tr ha ar aci cra ba, which owrd i bchar irra b . prcag poi a w w ago. Th objc-i wa o pr h cor crrc, h ira (TRY), roapprciaig oo qic. Howr, or orca i ha hcrrc wi i drgo rai rog apprciaio, gihigh xd ico rr i h cor, ab cooicgrowh, a crdib cra ba ad propc o a graicra i ri appi. W xpc coid pward adj- i h cor crdi raig, which wi hp rai ha o h TRY.

central banks pUmping Up tHeir balance sHeets

The Bank o Japans balance sheet was already large as a

percentage o GDP beore the central bank launched very ag-

gressive monetary policies during the spring. In relative terms,

its balance sheet would even be more than twice the size o the

Federal Reserves balance sheet i SEB orecasts or 2014 prove

correct.

Sorc: SEB/Macrobod

Documents

Investment Outlook 1305: Rising values in sight