Download Capital Market Presentation September 2011

Capital Market Presentation
September 2011:
Limits to growth
Hans-Jörg Naumer, Dennis Nacken,
Stefan Scheurer
Not for circulation to
private investors
Limits to growth
OECD-Leading Indicators: Almost every economic indicator is weakening.
3 0 /0 8 /1 1
1 5
1 5
1 0
1 0
5
5
0
0
- 5
- 5
- 1 0
- 1 0
- 1 5
- 1 5
2 0 0 2
U S A
E M U
O E C
2 0 0 3
2 0 0 4
2 0 0 5
2 0 0 6
2 0 0 7
2 0 0 8
2 0 0 9
2 0 1 0
J a p a n
D
Source: Datastream; Allianz Global Investors Capital Market Analysis
S
o u rc e : T h o m s o n
D a ta s tre a m
2
CDS premia are close to their peak levels.
iTraxx Senior Financials & iTraxx Europe
3 0 / 8 /1 1
3 0 0
2 2 0
2 0 0
2 5 0
1 8 0
1 6 0
2 0 0
1 4 0
1 2 0
1 5 0
1 0 0
8 0
1 0 0
6 0
4 0
5 0
2 0
0
0
2 0 0 7
I tr a x x
I tr a x x
S
E
2 0 0 8
2 0 0 9
2 0 1 0
2 0 1 1
e n io r F in a n c i a l s
(5
y e a r s )
u r o p e
(5
y e a r s )(r h s )
S
Source: Datastream; Allianz Global Investors Capital Market Analysis
o u rc e : T h o m s o n
D a ta s tre a m
3
Emerging Markets: Economic strength
Share of global economic growth and market capitalisation. (MSCI World AC, in US-Dollar).
USA
Europe
Japan
China
Brazil
India
Russia
0%
5%
10%
15%
20%
Share market cap
Source: Datastream; Allianz Global Investors Capital Market Analysis
25%
30%
35%
40%
45%
50%
Share economic growth
4
Economic leading indicators: Affected by capital market sentiment.
ifo-busines climate index and purchasing manager indices of the US and China.
3 0 / 8 /1 1
1 2 0
6 5
1 1 5
6 0
1 1 0
5 5
1 0 5
5 0
1 0 0
4 5
9 5
4 0
9 0
3 5
8 5
8 0
3 0
2 0 0 2
2 0 0 3
2 0 0 4
2 0 0 5
2 0 0 6
ifo -In d e x
IS M P u r c h a s in g M a n a g e r In d e x (r h s )
P u r c h a s in g M a n a g e r In d e x C h in a (r h s )
Source: Datastream; Allianz Global Investors Capital Market Analysis
2 0 0 7
2 0 0 8
2 0 0 9
2 0 1 0
S o u rc e : T h o m s o n
D a ta s tre a m
5
Most regional „surprise“ indices are at their historical turning
points.
Indicators concerning surprise events in global macro data (“Surprise Indicators”)
150
100
50
0
-50
-100
-150
JAP
EMU
US
19.05.12
19.02.12
19.11.11
19.08.11
19.05.11
19.02.11
19.11.10
19.08.10
19.05.10
19.02.10
19.11.09
19.08.09
19.05.09
19.02.09
19.11.08
19.08.08
19.05.08
19.02.08
19.11.07
19.08.07
19.05.07
19.02.07
19.11.06
19.08.06
19.05.06
19.02.06
19.11.05
19.08.05
19.05.05
19.02.05
19.11.04
19.08.04
19.05.04
19.02.04
19.11.03
19.08.03
19.05.03
-200
“Surprise”-Indicators are calculated as the deviation between actual economic data and the consensus estimates.
Source: Datastream; RCM
6
Valuations continue to suggest equity investments
P/E ratios 12 months forward.
3 0 / 8 /1 1
5 0
5 0
4 5
4 5
4 0
4 0
3 5
3 5
3 0
3 0
2 5
2 5
2 0
2 0
1 5
1 5
1 0
1 0
5
5
9 2
9 3
9 4
9 5
9 6
9 7
D A X
P /E
r a tio (b a s is : 1 2 -m
D A X
P /E
a v e r a g e
1 0 y B u n d s P /E
(1 0 0 /y ie ld )
Source: Datastream; Allianz Global Investors Capital Market Analysis
9 8
9 9
0 0
0 1
0 2
0 3
o n t h - f w d - p r o f i t s B) u n d s
0 4
0 5
P /E
a v
0 6
0 7
0 8
0 9
1 0
e r a g e
S o u rc e : T h o m s o n D a t a s t r e a m
7
Investment theme: Dividends
The Standard & Poor’s 500 also shows that dividends made up most of the losses caused by price
fluctuations.
Capital gains/losses
Source: Datastream; Allianz Global Investors Capital Market Analysis
Dividend income
8
Investment theme: High Yields
Solid liquidity reserves and the ongoing trend in the coming year of conservative corporate financial policy
should continue to provide a positive environment for corporate bonds.
3 0 / 8 /1 1
4 .5 0
2 5
4 .0 0
2 0
3 .5 0
3 .0 0
1 5
2 .5 0
2 .0 0
1 0
1 .5 0
1 .0 0
5
0 .5 0
0
0
2 0 0 2
E
E
M
M
U
U
H
C
2 0 0 3
2 0 0 4
2 0 0 5
2 0 0 6
Y
- G o v e r n m e n t B o n d s
( M L ) ( r h s )
o r p o r a te
B o n d s
- G o v e r n m e n t B o n d s
2 0 0 7
( M
2 0 0 8
2 0 0 9
2 0 1 0
L )
S
Source: Datastream; Allianz Global Investors Capital Market Analysis
o u rc e : T h o m s o n
D
a ta s tre a m
9
Decisive Insights:
 In terms of price/earnings ratios, the equity markets are already anticipating an
economic decline and a drop in earnings. Equities now look distinctly cheap relative to
government bonds, although there are regional variations here, too.
 Concerns about the economy and the (EU) debt crisis dominate the picture and are
apparently also beginning to have an effect on real economic sentiment indicators. This
widespread pessimism provides room for positive surprises.
 The medium- to longer-term outlook for equities is positive. However, given the current
uncertainties, not least about progress in resolving the debt crisis, it is advisable to
retain a neutral weighting between equities and bonds.
It is advisable to retain a neutral weighting between equities and bonds
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www.allianzglobalinvestors.de/capitalmarketanalysis
11
Disclaimer
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