The outlook on Greece's banking system remains negative, due to the banks' stressed operating conditions stemming from a deepening recession and the ongoing Greek government debt crisis.
The banking sector's solvency, funding and financial performance will remain under acute pressure, says Moody's Investors Service in a new Banking System Outlook.
Moody's expects that the ongoing deterioration in operating conditions will continue over the next 12-18 months and will impact the following areas.
The impact of a major disruption in the supply of oil from Iran would depend on the IEA’s possible intervention, the duration of any interruption and the degree to which any attack might catch the markets by surprise.
Andreas Utermann, Global Chief Investment Officer at Allianz Global Investors/RCM, provides his outlook for 2012.
Interest Rates and Bonds
Our predictions for 2011: We anticipate little movement in short rates for the major OECD economies but gradual tightening in the emerging markets. We would be very cautious towards medium to long term maturities across the world, which we feel are significantly overvalued owing to quantitative easing (QE) activity and undue risk aversion.
“The ECB hiked interest rates twice in 2011 but has now started to back-pedal and cut rates again. US and UK interest rates have remained extremely low, whilst in emerging markets, the ongoing cycle of rate hikes has come to an end and in fact several emerging economies have recently started to cut rates.
“Looking ahead we expect rates to start to come down further in the Eurozone whilst emerging markets are likely to continue to reduce rates. In the US and UK, as well as in Japan, we expect the policy of extremely low interest rates to continue into the foreseeable future.
Andreas Utermann, Global Chief Investment Officer at Allianz Global Investors/RCM, provides his outlook for 2012.
Inflation
Our prediction for 2011: We would see diverging inflation trends, with continued moderate inflation within the Central banks’ comfort zone in the more highly indebted countries, and higher inflation in the countries with trend or above trend growth.
“Indeed, inflation rates have risen in emerging markets, in some cases 10% or more. Central banks have reacted accordingly and embarked on a tightening cycle. In the second half of 2011 rates peaked but even now remain at comparatively high levels. In the developed world, inflation rates are clearly below the levels witnessed in emerging markets. However, they have also risen to new cyclical highs and are now above the levels which central banks are aiming for in the medium term.
Andreas Utermann, Global Chief Investment Officer at Allianz Global Investors/RCM, provides his outlook for 2012.
Budget deficits
Our prediction for 2011: While major sovereign defaults have been averted, the spectre of debt restructuring or even default for some of the eurozone’s peripheral countries would continue to haunt the markets.
“While our expectations for ongoing debt problems in the eurozone have turned out to be correct, we did not and could not have anticipated the kind of escalation of the debt crisis which we have witnessed since the summer.
“Given the complexity of the problems, a quick fix is unlikely. Political actions which can realistically be implemented - i.e. fiscal tightening, tighter harmonisation of economic and fiscal policy in Europe - take a long time to be implemented and even longer to be effective; in our view most likely too long for financial markets.
Andreas Utermann, Global Chief Investment Officer at Allianz Global Investors/RCM, provides his outlook for 2012
“As we head into 2012, I will focus on the themes likely to shape the direction of capital markets and provide a brief outlook for each major asset class. In doing so, I shall highlight our predictions from last year and consider in the light of how actual events played out.”
Economic outlook
Our predictions for 2011: Trend economic growth will probably remain lower than before the crisis; however, given the low level of central bank rates, high cash positions of the corporate sector and solid demand from emerging markets, economic growth should be reasonable.
“While 2011 growth was indeed solid, we are clearly facing a significant slowdown in economic activity in 2012. The rise in the oil price in the first of half of 2011, tighter monetary policy in emerging markets, and, of course, fiscal tightening in the US and in Europe, is all taking its toll on growth.”
Stirling Square Capital Partners, a pan-European private equity firm focused on transformational cross-border transactions, has agreed a €40m growth capital investment into Portugal-based Omni Helicopters International S.A..
Lisbon-based Omni is the helicopter services specialist that was recently de-merged from the broader aviation group Omni Aviação SGPS S.A.; it owns a fleet of medium- and heavy-lift helicopters servicing the oil & gas industry and emergency medical transportation services.
Some 23% of investors believe private equity has become more attractive in light of recent volatility in financial markets, Preqin research has found.
A further 64% of investors do not view private equity any differently as a result of the current financial climate and 14% find it less attractive.
Many investors feel that private equity has become increasingly attractive as public markets have become more volatile, with some identifying opportunities in times of economic distress and others planning to look to emerging markets for new investments.
Commenting on today’s announcement by Chancellor George Osborne that he will raise the bank levy by 0.088%, Matthew Barling, banking tax partner at PwC, said:
“It is encouraging that the Government has recognised that a financial transaction tax would be a tax on pensions. Banks will be heartened that the Government intends to resist any attempt by the EU to impose a tax on the City of London, which would be a serious blow for banks, markets and, in the end, consumers.”
Commenting on George Osborne’s Autumn Statement announcement today on planned infrastructure spending, AMP Capital Head of Infrastructure Europe Boe Pahari said:
“This is an excellent move by the Government, whilst not unexpected. Mobilising pension funds at a time when banks are deleveraging is a solid alternative for creative economic stimulus. Investing in infrastructure has a way of creating momentum in jobs, consumer and capital markets but from a secure, low leverage, base.
Deutsche Bank says it has been appointed by Tradition London Clearing to service its transactions in the Euronext market. Tradition London Clearing is the clearing arm of Compagnie Financière Tradition, and is described as one of the world’s largest interdealer brokers in over-the-counter financial and commodity related products.
Patrice Brault, CEO of Tradition London Clearing, says (as is almost obligatory in these situations): “Deutsche Bank is the ideal partner for us to provide a tailored solution in the Euronext markets.”
The Hedge Fund Association (the HFA) reports from Florida that it is launching a new branch to chamption hedge funds domiciled in Switzerland, Italy, Spain and Portugal. José Castellano, managing director of Pioneer Investments, is the branch director.
“It is increasingly clear that the fate of the economy in southern Europe is powerfully linked with the world’s economy,” says David Friedland, HFA president and president of Magnum US Investments.
Citi reports that its Global Transaction Services business, acting through Citibank N.A., has been appointed by Partner Communications Company, an Israeli provider of telecommunications services, as the successor depositary bank for its American Depositary Receipt (ADR) programme. Partner's ADRs trade on the NASDAQ under the symbol 'PTNR', with each ADR representing 1 ordinary share. Partner's ordinary shares are listed on the Tel Aviv Stock Exchange.
Standard Chartered Private Equity (SCPE) says it has become the second-largest shareholder in Dasan Networks, a telecom network solutions provider in Korea listed on KOSDAQ. SCPE now owns 18.6% of the shares following the conversion of exchangeable and convertible bonds upon their maturity.
What's the story with yesterday's rally? It wasn't founded in any facts or new truths - in fact, losts of 'facts' yesterday proved factually unfactual and proved fervid imaginings . Initially we dismissed it as driven by market technicals - short covering and such. But as Jim pointed out mid-day, it was feeling more sustained. Headlines on the blogosphere and papers now say the upside stems from 'hopes for European crisis resolution'. So I've been thinking more about it overnight.
And I surprise myself by concluding I AM BULLISH!
What? On the morning of what's likely to be a dismal Italian auction, with the OECD warning of eurozone recession and contagion, amidst still crashing sentiment across credit markets, S&P rumoured to put France on negative outlook, Moody’s preparing to slash ratings on over 80 European banks, and the dance band on the Titanic nervously eying the Iceberg lurking off the starboard bow, Blain the Bear turns bullish? Why...what have I been smoking/drinking? (That’s a completely other story...)
George Greig, William Blair & Company's global strategist for Investment Management, recently provided his 11th Annual Global Market Outlook
Global Market Outlook: The Current Existential Crises of Contemporary Capitalism — Implications for Future Market Returns
The global market is in its third crisis episode since the peak of the tech bubble in early 2000. This third bear market follows closely on the heels of the global financial crisis of 2008, and in some ways echoes lingering concerns of unfinished business associated with that event. There are now concerns that many of the tacit assumptions made about the functioning of the world economy are not as accurate as expected.
Greek Banking Outlook Stays Negative
The outlook on Greece's banking system remains negative, due to the banks' stressed operating conditions stemming from a deepening recession and the ongoing Greek government debt crisis.
The banking sector's solvency, funding and financial performance will remain under acute pressure, says Moody's Investors Service in a new Banking System Outlook.
Moody's expects that the ongoing deterioration in operating conditions will continue over the next 12-18 months and will impact the following areas.
Continue reading "Greek Banking Outlook Stays Negative" »
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