Kevin Lings Stanlib 15.11
Transcript of Kevin Lings Stanlib 15.11
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KEVIN LINGSSTANLIB CHIEF ECONOMIST
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Greece 2-year Bond Yield
05
10152025
303540455055606570
75
80859095
100
200
9
201
0
201
1
%, yield, daily
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Market Capitalisation of Apple vs
Euro-area Banks
0
200
400
600
800
1000
1200
200
7
200
8
200
9
201
0
201
1
$ Billion, market capitalisation
Euro-area banks
Apple
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USA
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Index
US Consumer Confidence
20
40
60
80
100
120
140
160
8 5 8 6 8 7 8 8 8 9 9 0 9 1 9 2 9 3 9 4 9 5 9 6 9 7 9 8 9 9 0 0 0 1 0 2 0 3 0 4 0 5 0 6 0 7 0 8 0 9 1 0 1 1
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-7
-6
-5
-4
-3
-2
-1
0
1
2
3
4
5
20
05
20
06
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07
20
08
20
09
20
10
20
11
%q/q, annualised
US Real Consumer Spending
Growth
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-60
-50
-40
-30
-20
-10
0
10
20
30
40
'2010 N D '2011 F M A M J J A S O
000s
US Government Employment
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-50
0
50
10 0
15 0
20 0
25 0
30 0
'2010 N D '2011 F M A M J J A S O
000s
US Private Sector Employment
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-10
-8
-6
-4
-2
0
2
4
6
200
7
200
8
200
9
201
0
201
1
201
2
%q/q
High estimate
Low estimate
Consensus
Consensus forecast updated October 2011
US Real GDP Growth Forecast
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0
1
2
3
4
5
6
7
197
0
1971
1972
197
3
1974
197
5
197
6
1977
197
8
197
9
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
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0
2011
Million
US Unemployed for 27 Weeks or
More
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10
12
14
16
18
20
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
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1986
1987
1988
1989
1990
1991
1992
1993
1994
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2011
Million
US Employment in Manufacturing
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11
12
13
14
15
2005
2006
2007
2008
2009
2010
2011
Million
US Vacant Homes (Year-round)
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Las Vegas house price index, nominal, S&P Case Shiller
90
100
110
120
130140
150
160
170
180
190
200
210
220
230
240
01 02 03 04 05 06 07 08 09 10 11
Prices have
declined by 60%
US House Prices in Las Vegas
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US Gross Government Debt
61.1 62.371.6
85.294.4 100
105 108.9
0
20
40
60
80
100
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
%, percent of GDP
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1.0
1.3
1.5
1.8
2.0
2.3
2.5
2.8
3.0
3.3
3.5
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
$bn, 12-month running total
Expenditure
Tax revenue
US Federal Budget
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Euro-area
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Greece GDP Growth
-9-8-7
-6-5
-4-3
-2-1012
345
67
2004
2005
2006
2007
2008
2009
201
0
2011
%y/y
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Greece Retail Sales
-20
-17
-14
-11
-8
-5
-2
1
4
7
10
2008
2009
201
0
2011
%y/y
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Greece Unemployment Rate
%
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Greece Equity Market
700
1200
1700
2200
2700
3200
3700
4200
4700
5200
5700
2006
2007
2008
2009
201
0
2011
Greece equity market, index
-85%
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Greece Government Debt
106.1 105.4 110.7
127.1142.8
165.6189.1 187.9
0
20
40
60
80
100
120
140
160
180
200
2006
2007
2008
2009
201
0
2011
2012
201
3
%, percent of GDP
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Greece and Euro Bail-out Package:
26 October 2011
Value of support package for Greece will now be 130 billion, upfrom 109 billion when the 21 July 2011 deal was concluded
Deal with private banks and insurers to accept a 50% loss onholdings of Greek government bonds
Recapitalisation of the European banking sectorby around 106billion.
Scale up the EFSF. Fund was 440, but has provided help to
Ireland, Portugal and Greece, leaving around 290 billion. Around250 billion of that will be leveraged 4-5 times, producing a
headline figure of around 1.0 trillion
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Greece Government Debt Billion
0
50
100
150
200
250
300
350
400
1988
1989
1990
1991
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1993
1994
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1996
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2011
Billion
Increased by an average of 14.2% a year
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Greece vs Italy Government Debt
Billion
0
200
400
600
800
1000
1200
1400
1600
1800
2000
1988
1989
1990
1991
1992
1993
1994
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2011
Billion
ItalyGreece
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Spain
11.5%
Italy
16.8%
Ireland
1.7%
Greece
2.3%
Germany
27.2%
France
21.0%
Belgium4.0%
Cyprus
0.2%
Malta
0.1%
Netherlands
6.4%
Portugal
1.8%
Slovakia
0.7%
Luxembourg
0.5%
Slovenia
0.4%
Austria3.2%
Estonia
0.2%
Finland
2.0%
Breakdown of Euro-area GDP
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Japan
Japan Prime Ministers 7 Prime
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Weak prime minister controlled by shifting powers of intraparty interests
Japan Prime Ministers 7 Prime
Ministers in
6 Years
Junichiro
Koizumi1 979 days
Shinz
Abe365 days
Yasuo
Fukuda364 days
Taro
Aso357 days
Yukio
Hatoyama265 days
Naoto
Kan451 days
Yoshihiko
Noda2 Sep11
http://en.wikipedia.org/wiki/File:Yoshihiko_Noda_cropped_Noda_Geithner.jpghttp://en.wikipedia.org/wiki/File:Naoto_Kan_cropped_3_Naoto_Kan_2_20110129.jpghttp://en.wikipedia.org/wiki/File:Hatoyama_Yukio_1-3.jpghttp://en.wikipedia.org/wiki/File:Fukuda_Yasuo_1-3.jpghttp://en.wikipedia.org/wiki/File:Aso_Taro_1-2.jpghttp://en.wikipedia.org/wiki/File:Abe_Shinz%C5%8D.jpghttp://en.wikipedia.org/wiki/File:Koizumi_2010_cropped.png -
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Japan Gross Government Debt
191.3 187.7 195216.3 220
233.1 238.4 242.9
0
25
50
75
100
125
150175
200
225
250
2006
2007
2008
2009
201
0
2011
2012
201
3
%, percent of GDP
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0
5
10
15
20
25
30
35
40
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2004
2005
2006
2007
2010
2020
2030
Percent of total population, %
Percentage of population younger than 15
Percentage of population older than 64
Percentage younger than 15:Japan, 13.0%
China, 21.6%
Brazil, 27.8%
India, 33.0%
Japans Aging Population
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Government Debt % of GDP
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40
50
60
70
80
90
100
110
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
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0
2011
2012
% of GDP
Emerging markets
Advanced economies
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Recent Sovereign Rating Changes
Upgrades Israel (Sep)
Peru (Aug)
Czech Republic
(Aug) Estonia (Aug)
Uruguay (Jul)
Bulgaria (Jul)
Angola (Jul)
Brazil (Jun) Colombia (May)
Downgrades Italy (Sep)
USA (Aug)
Japan (Aug)
Greece (Jul)
Portugal (Jul)
Spain (Jul)
Ireland (Jul)
S i C dit R ti L
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Developed markets
Emerging markets
Sovereign Credit Ratings on Long-
Term DebtAverage of Moody's S&P, and Fitch long-term ratings
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$ Billion
0
100
200
300
400
500
600
700
800
900
1000
1100
1200
1300
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
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2006
2007
2008
2009
2010
2011
Emerging Markets Private Capital
Inflows (net)
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$ Billion
0
50 0
1000
1500
2000
2500
3000
3500
4000
4500
5000
5500
6000
6500
7000
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Emerging Markets Foreign Reserves
(excluding gold)
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Fixed Investment Activity
1516171819
2021222324252627
282930313233
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
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201
0
2011
% of GDP
Emerging markets
Advanced economies
Industrial Production: Developed
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75
10 0
12 5
15 0
17 5
20 0
22 5
25 0
2000
2001
2002
2003
2004
2005
2006
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2008
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0
2011
Index
Emerging Economies
Developed Economies
Industrial Production: Developedvs.
Emerging Markets
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2001
USA 32.1% of World2011
USA 21.5% of World
1994
Japan 17.8% of World 2011Japan 8.4% of World
USA and Japan has lost economic power
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1991
China 1.8% of World2011
China 10.0% of World
China has gained economic power
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50
100
150
200250
300
350
400
450
500
550
600
650
700
750
800
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
SA exports to emerging markets vs developed markets
Index, Jan 1998 = 100
SA exports to emerging markets
SA exports to developed markets
Relative performance chart
What are the investment
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What are the investmentimplications of the current macro-
economic environment?
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SA Equities vs. US Equities
83
86
89
92
95
98
101
104
201
1
F M A M J J A S O 80
85
90
95
100
105
110
SA equities, Index
SA equities (lhs)
US equities (rhs)
US equities, Index
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SA Bonds vs. US Bonds
7.0
7.3
7.5
7.8
8.0
8.3
8.5
8.8
9.0
9.3
9.5
2009
201
0
2011
1.5
1.8
2.0
2.3
2.5
2.8
3.0
3.3
3.5
3.8
4.0
4.3
SA bonds, % yield
US bonds (rhs)
SA bonds (lhs)
US bonds, % yield
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Three Key Investment Thoughts
Need to lower expectations of investment return especially indeveloped markets
Need to increasingly take a world view of investments global investmentthemes increasingly applicable
Diversification is crucial given current uncertainty