The political chimera, with its unexpected and sudden inefficiencies, inevitably falls into the economy with a wavering trend and its periods, more or less long, of growth, decrease and stability.
An universal and prompt remedy to shake off the burden of this overwhelming economic crisis could be unrealistic but, with a close examination of the situation, it is possible to speculate on the future and therefore understand what are the best investments for our savings. Investments that could be profitable in the future.
In order to brighten up our hazy horizon that lays
ahead of us, Guido Morra, promoter of “Finanza e Futuro” (Finance and Future – Deutsche Bank group), answers to some of our questions.
What investments have proved to be more profitable in 2013?
“In 2013, the funds that have generated the most value were the ones on the stock markets of developed countries: Europe, United States and Japan. Emerging countries have instead suffered an economic slowdown that has had a negative impact on markets and on their currencies”.
In 2014, would it still be profitable to invest in the U.S., European and Japanese stock market,?
“We think so. Our strategists suggest the best performing markets of 2014 will be the ones in stabilized economies, with some exceptions for Japan. The stock market have enormously increased in this country over the past 12 months, registering a very strong performance.
This trend has been mainly caused by a change in expectations due to the possible impact that the devaluation of the yen, generated by the aggressive financial policy of the BoJ, would have made on exporting companies. Now, it will be very important to see if the Prime Minister Abe will be able to follow out the effect caused by the new trend in the financial policy, implementing new structural reforms that are necessary for Japan to trigger sustainable growth”.
And according to you, would such scenario be possible?
“The U.S. market has the best performances. The Fed cash injection has significantly incentivized the American economy, those numbers have the power to further consolidate the recovery. We recommend, besides the American market, to evaluate the European market too. We believe European economy is starting to recovery, a recovery which will strengthen in 2014, also thanks to the support of the BCE. This will encourage, besides businesses subjected to the global economic cycle, those subjected to the domestic economic cycle”.
In particular, which are the most attractive European markets?
“We should pay some attention to one of the most efficient and representative economies in Europe: Germany. Let’s not forget though, some depressed markets such as the Italian and Spanish which, in a stable political scenario they could perform very well”.
What do you expect from the Dollar?
“We believe that in 2014 the American currency will be strengthened by the slowing down of the cash injection (Q.E. editor’s note). The American capitals, that looked for some good returns abroad, will be back and they will reinvigorate the American currency”.
For the above-mentioned economic slowdown, is it better not to buy stocks from emerging countries?
“In 2013 the emerging stock markets have shown to be sensible to the American monetary policy expectations. As we are expecting in the next few months the QE to slow down, we believe a huge and wholesale exposure to emerging countries in this moment, will represent more a risk than an opportunity. Therefore, looking closely at the dynamics in each countries, we believe the Chinese market could benefit from the extended structural reform plan recently presented by the Government, that promotes the development of competitive market dynamics in many sectors of the economy “.
What about the bond market?
“Bonds will hardly create value. More than anything, in 2014 they will stabilize client’s portfolios. We advise to avoid exposure to German and American rates and to keep a tactic exposure in the short end of European country yield curve. We expect BCE to preserve low rate policy also in 2014”.
Would you not recommend it?
“No, it is advisable not to risk too much. Bonds will be more safer than stocks. This means though, a good allocation in line with the market situation, preferring medium-short term investments ”.
What do you think instead of commodities and gold?
“Our group does not consider commodities, in general, as an asset class particularly appealing. While industrial metals could be effected in the medium term by the economic recovery, gold is not considered to be a good investment because it has always been a store of value against inflation. There is no correlation between the value of the American dollar and long-term interest rates that, as just said, suggests a poor prospects for precious metals”.
Is 2014 going to be a good year for stock markets?
“Yes, otherwise sudden destabilizing events occur. The major developed economies are slowing recovering from the crisis and counting on the support on the short-term of central banks: these are the factors that should support stock markets”.
The new pension plan arise many concerns among citizens. Do you have any advice for them?
“In the past few years reforms have been very incisive. Social security benefits have been largely reduced and legal working age has been extended, especially for women. Today, more than ever, we have to come to terms with this epoch-making change: not much is said about it. We should find in private pensions the remedy that will allow us to maintain our standard of living without immobilizing huge assets”.