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IvstmtOtoo Ma Spigim f quiiprivate banking investment strategy
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7/29/2019 Investment Outlook 1303: Springtime for equities
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Investment OutlOOk - mARCH
Tab o otts
Sragy
rodcio..........................................................................................................................5
Poroio ragy .................................................................................................................6Th: g o h qii .............................. ................................ ....................... 11
Th: Pychoogica ic o cooic dciio .............................. ........... 1
Th: Wha ri ar worh aig? ............................... ................................ ............. 16
markets anD asset CLasses
Macro ary ............................................................................................................ 18
Nordic qii ............................... ................................ ................................ ................... 20
Goba qii icdig h ory Mod ................................................................ 22
Fixd ico ............................ ................................ ................................ ......................... 26
dg d ............................. ................................ ................................ ......................... 28
a a ............................... ................................ ................................. ......................... 30
Pria qiy ................................ ................................ ................................ .................... 32
oodii ................................ ................................ ................................. .................... 3
rrci ................................ ................................ ................................ .......................... 36
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4 Investment OutlOOk - mARCH
Thi doc prodcd by SEB coai gra arig ioraio abo i i prodc. Nihr h aria or h prodc dcribd
hri ar 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
ay ch diribio ay b aw. hogh h co i bad o orc jdgd o b riab, SEB wi o b i ab or ay oiio or ia ccraci,
or or ay o whaor which ari ro riac o i. i rarch i rrrd o, yo hod i poib rad h rpor ad h dicor
coaid wihi i, or rad h dicor raig o pcic copai od o www.b./b/dicair. oraio raig o ax ay bco
odad ad ay o yor idiida circac. prodc prodc a rr id o ri. Thir a ay a a w a ri, ad hioric
rr ar o gara o r rr; i o ca, o ca xcd h iiia ao id. Whr ihr d or yo i i crii do-
iad i a orig crrcy, chag i xchag ra ca ipac h rr. Yo ao ar rpoib or yor i dciio ad yo hod away
obai daid ioraio bor aig h. For or i oraio pa ir aia h Ky or oraio Doc or d ad ioraio
brochr or d ad or rcrd prodc, aaiab a www.b.. cary yo hod adic aiord o yor idiida c ircac ro
yor SEB adior.
Ifmi bu xi. a cor o or raioa Pria Baig ofc i Lxborg, Sigapor ad Swizrad yo ar obigd o p
yor iord o h ax r appicab i h cori o yor ciizhip, ridc or doici wih rpc o ba acco ad acia raac-
io. SEB do o proid ay ax rporig o orig cori aig ha yo yor proid cocrd ahorii wih ioraio a ad whrqird.
Goba ad o Sragy
+ 4
ha.pro@b.
Ad OlDpy hi fcr
+ 4 4
adr..oo@b.
L gu aGoba ad o Macro Sragy
+ 4
ar.apa@b.
Vic d OliviPoroio Maagr ad ad o S Lxbrg
+
icor.doiira@bgrop.
L gqFixd ico Sragi
+ 4
ar.graqi@b.
ej LudllEqiy Sragi
+4
bjor.da@b.
Hl CoqEqiy Sragi
+4
h.croqi@b.
J EvldEcooi
+4
joa.ado@b.
Ri K
Ecooi+
ri.a@bgrop.
Cl-Fl scEcooi
+4
car-ip.robac@b.
Ccl kohooicaio Maagr
+4
cciia.oho@b.
pll buchBradig & oicaio Maagr
+4
pria.bch@b.
Thi rpor wa pbihd o March , .
Th co o h rpor ar bad o ioraio ad aayi aaiab bor Fbrary , .
Sragy
7/29/2019 Investment Outlook 1303: Springtime for equities
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Iduci
Investment OutlOOk - mARCH
The market upturn phase we have seen in late
2012 and early 2013 is based on a positive
change o direction in economic data. What we
need to ask is whether this stock market upturn
is sustainable or not. Is this the beginning o a
new long-term phase, or is it a temporary pause
in the crisis-aected and volatile period in which
we have been or a long time?
r a i ha a w, aiab pha ha ard.
Thi i o Investment Outlookxai h poia or
ch a pha. Th coig priod probaby rpr a b-
r qiy i cia ha rc yar ha ord.
ipora prrqii, howr, i a o cooic
abiiy ha ca ai acia ar hrogh h r-
aiig ri i h word cooy. Thi i bca w i
ha o hig o worry abo. Poiica dop i
Erop ay coi o proid rpri, boh i cori
ha ha acia prob ch a Spai ad ay ad i
h ora proc o craig a dra Erop.
irig qio ha w dic i hi i i howor wiig o a ri ha chagd i rc yar. r
wiig o i ad how w iw ar ar o cor
argy drid by or pa xpric, ad h pa w
yar ha b ogh.
pricip, hr i a who graio o ior who
ha r xpricd h oc ar a a orc o
ab rr. Th dia occaioay pa o h dah
o h qii cr. Sch co ay iga good
byig opporii, b hi rqir big prpard o a
ad i wih crai ri aociad wih cooic growh.
Thi i aohr y i: ow do w iw h growh rd
ahad?
igh ow, Erop rai a prob chid, h US ha ca
prob ad rgig ar ar growig, b owha
or owy ha w ar accod o. hi cox i iipora o h og cyc, which proid gidac
abo how o iw dir a ca i a hiorica
prpci. or a, hr ar good rao o
b hop abo h r. Thr ar good opporii
or rr, b a away w or xpcaio a a
raoab . or riw o h a ca w
oior, yo ca rad or abo h opporii.
W ay ry w b o h hrhod, or i h bgiig, o
a w pha. rcr wi b irig ad i poia
wi a io pac, bi by bi.
Hans Peterson
Chie Investment Ocer Private Banking
and Global Head o Investment Strategy
Sitim o qitis
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6 Investment OutlOOk - mARCH
mat ist t tis a th cooc ouloo hould od oou fo o dco
Th o rc daa ha proidd a picr o a rogr cooy, pciay i h US ad hia. Gi h iz oh cori, hir acrocooic aiic d ipora iga or h ir word, ad good aiic ha a
abiiig c o h goba cooy.
m luo hould ol
Vaaio ha ri i oc ar, d o h harp pric pr ha praid ary i . Today hr i o
obio dico. Fro ow o, ar prorac wi b dri by arig growh. Th a o i h
prad bw corpora ad gor bod idica raoab aaio.
th hould ood lqud
ra ba wi coi o ppor h cooy, wih h US Fdra r poy arg a a xap.
Th Eropa ra Ba (EB) rai rogy coid o agardig h ro. EB Prid Mario Draghi haapid hi ag hrogh word ad acio. Gobay, hr i a w ad or xib approach o rigid iaio
arg.
pofolo
20132013
2013 eCOnOmiC grOWtH WiLL Drive stOCk markets
Stokmaktfoman
Ecooic rcory diiihig ri
opay rporcor h rcory adhar pric
Fro ow o, oc ar wi b dri bycopay arig growh ad good acro ig-a ha cor h rcory. ra ba arcoiig o proid ppor hrogh oaryi ar.
i:
Poiic i h US drig h prig ad i Eropdrig h a
aio i rgig ar
rrcy c (rba crrcy war)
Sorc: SEB
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7Investment OutlOOk - mARCH
Poroio ragy
-5%
0%
5%
10%
15%
20%
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
Equities Fixed income Hedge funds Real estatePrivate equity Currencies Commodities
r ri ad rr xpcaio ar a ro h SEB o Viw ad ar bad o or acro cario ( pag ). Th x-
pcaio cor h x oh. For qii, h orca rr o h goba oc ar. For xd ico, h orca rr
o a ba o i grad ad high yid corpora bod. Th ra a orca rr o h ra a i
r (ET) ar, whi h coodii orca rr o a ba i which h rgy, idria a ad prcio a ca-
gori ar qay wighd. or crrci, h orca rr o h apha-graig capaciy o a orig xchag (FX) radigaagr.
Sic h prio diio o Investment Outlook(pbihd o Nobr 7, ) w ha ad wo acica adj pria-
riy i h qii a ca, whr rapid pr ha cad rr xpcaio o b pd dow o abo 7 pr c (ro
pr c) drig h x oh a pr c oaiiy (prioy pr c). Sic Dcbr h goba oc ar, a
ard by h MS Word idx i oca crrci, ha gaid or ha pr c. ohr word, h rcory ha bg. a
ry hor-r prpci hr i obioy a ri o a ior oc ar corrcio, b i h og r h poia or qii
rai, pciay wh copard o arai orc o rr i h xd ico a ca.
Wh w a orca, w wor wih -oh apio i ordr o ha a coo i horizo or h poroio iaio
w pror. r poiio ha qii ar worh byig i bad o or iw o h i h prpci o a cooic cyc.
eXpeCteD risk anD retUrn in tHe neXt 12 mOntHs
ASSeT clASS expecTATIOnS nexT 12
MOnThS
reASOnIng
reTurn rISk
eqitis % % Eqii ar raoaby ad, proidd ha arig orca procorrc. oraio i dirab i ordr o achi grar abiiy. Bracro, ab arig ad ow io h oc ar wi proid goodpoia.
Fi iom % % Sprad bw high yid corpora bod ad gor bod raiaraci, whi i grad bod carry oo ch pric ri a pr
o b araci. L ora poia i hi a ca.
h s % % Gray br poia or hdg d ar a chagig .
ra stat % % Th ar ha ard, b raparcy rai ow. Priary arar h o appaig, b hr ar ao araci arai i cod-ary ar, ahogh hy io grar ri.
pivat qity % % Good cooic growh ad raoab aaio wi proid po-ia i a cia o icraig ri appi. ca o craiy ad highoaiiy, hi a ca i or ry acd ha qii.
commoitis % % Dri by growh i hia, which ow appar o b abiiig. Y hr ari worri abo h cooic rd a h goba ad abo wahrcodiio. Sciy araci, wih idria a a or ai i- choic.
cis % % Srog acia baac, rapid growh, high ir ra, propc o goodri appi ad ED oary poicy ar rao or biig ha EMcrrci wi coi o ri i a agai ED crrci.
CHanges in OUr eXpeCteD retUrn
Since the last issue o Investment Outlook
(published on November 7, ), we have
made adjustments mainly in the equities as-
set class, where return expectations have been
pulled down due to rapid share price upturns.The same thing applies to private equity, which
has perormed strongly in a short period.Sorc: SEB
Sorc: SEB
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Investment OutlOOk - mARCH
Poroio ragy
th oc co d wll foul d 2013.
Th goba growh rd i aorab ad w or good cooic prorac i -, which wi dri h ocar highr ad graday boo ri appi. Thi wi a a icraig iow o capia io h oc ar ad o
o ohr a ca ad ay b h ar o a ajor rcory aig yar.
icl owh-od, l do.
Drig h priod o wa, oc ar ior ocd o di copai. Now hy wi icraigy oc ogrowh copai o ario id. oid ow ir ra wi ao b growh copai.
a qu, cuc d od wll of .
Good cooic growh i hia, capia ow o a porio o ia ar, rog rad gr. ggri iprogra i Japa wi ipac a o ia.
euo co ud w fo low ll... luo c.
Erop ha ajor growh poia, wih a o o rcory y o co. Th oy ppy i bgiig o ri. Poiica ad-
r wi probaby o ipo ch or ca ariy. rr acco baac ad ay prodciiy wi hi i apoii dircio.
bod ld dull o h w u.
Yid ha hi boo a ragic chag or ay ior. Thi wi ad o or i i hdg d adr i ada i xd ico crii ad wi probaby ao icra ow io oc ar.
Coo od wll how coud ood u, u ld ol.
Yid prad agai orig bod rai araci or corpora bod wih owr crdi raig (high yid), whipric o corpora bod wih op crdi qaiy (i grad) ar crry oo riy o b araci. L ora po-ia i hi a ca ha bor.
main strategies in OUr pOrtFOLiO management in 2013
ASSeT clASS weIghT* reASOnIng
eqitis Eqii ar raoaby ad, proidd ha arig orca procorrc. oraio i dirab i ordr o achi grar abiiy. Bracro, ab arig ad ow io h oc ar wi proid goodpoia. Foc o Erop ad cycica har. W ar coiig o high-igh ia ad rgig ar a h o araci. id ro hia,w ar poii oward dopd ia cori ch a doia,Maayia ad Thaiad. Ear Erop i aohr araci iarai wih ow aaio ad high growh.
Fi iom orpora bod ar prrab, wih high yid a br a ic daapio rai ow. Sprad ha arrowd b rai a raoab
. Gor bod ar araci, ic ir ra wi o
pward rapidy wh a or poii cooic cario i dicod.h s Mar Nra ragi ad ho wih o o qiy ri ar
prrab i h praiig ar iaio.
ra stat Th ar ha ard, b raparcy rai ow. W do o cr-ry ha hi a ca i or poroio.
pivat qity Good cooic growh ad raoab aaio wi proid good po-ia i a cia o icraig ri appi. ca o craiy ad highoaiiy, hi a ca i or ry acd ha qii. W archooig o o a hi ri i or poroio righ ow.
commoitis Sciy araci, wih idria a a or ai i choic.
cis o o aio o h crrci o ia cori wih rog da-a. Foc o h y.
Sorc: SEB* Weight shows how we currently view the asset class as a part o a portolio. Level 4 is a neutral situation. These weightsare 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.
7/29/2019 Investment Outlook 1303: Springtime for equities
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Investment OutlOOk - mARCH
Poroio ragy
mODern investment prOgrammes
aLLOCatiOn OF CapitaL aCrOss seven asset CLasses at tHree risk LeveLs
mODern prOteCtiOn
Gi h ri o riig ir ra ahad, hr i a gra
oc o ir ri ra i. bo pr co h poroio i aocad o bo r aagr,
who ha r ada ad xibiiy o a ada-
ag o chag i h yid cr, hrby aiaiig
ir ra ri ra xpor. igh yid xpor, which
ao o pr c o h poroio, coi aiy
o hor draio high yid bod ad ragd oa.
h hdg d b-poroio (abo prc o Modr
Procio) w oc o ar ra ragi or cor-
rad rr ad rdi Log/Shor i ordr o o h
poroio oa crdi ri.
Th poroio hod h b ab o gra rr
i a cia o riig ir ra. W ar coorab wihh crr aocaio. Looig ahad, howr, xpor o
ia crrci (. pr c oday) ay b icrad.
mODern grOWtH
Wih qiy ad high yid xpor o pr c ach, Mod-
r Growh i poiiod or a coid goba rcory, b
hod awhi ora or gai cario raiy
w. dg d acco or or ha pr c, which i
aid a abiiig h poroio ad coribig corrad
rr o h oa poroio.
h qii b-poroio, w oc aiy o goba qiy
aagr wih good poia o proid a br rr ha
oc ar idic i a or poii cooic cario.
rgig ar qii, w ao ha a or pcic
xpor o ia ad hia. To chio h xd ico
b-poroio agai riig ir ra, w ha graday
owrd ir ra ri by a o hor draio high yid
bod ad ragd oa.
mODern aggressiveModr ggri icd hodig iiar o ho o Mod-
r Growh, b h a ca aocaio i or aggri,
wih a xpor o qii o abo 4 pr c, whi xd
ico ir acco or pr c o h poroio
( pr c high yid bod ad pr c rgig ar
db). dg d acco or abo pr c.
ordr o achi i og-r rr arg, h poroio
ha a argr xpor o ario ri pri ad h ha a
or pro-cycica ar ha Modr Growh, b oa ri i
crry owr ha i h oc ar gray.
Sorc: SEB
9.5%
1.5%
0%
0%
0%
18%
71%
0%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Cash
Currencies
Commodities
Private equity
Real estate
Hedge funds
Fixed income
Equities
Previous Current
Sorc: SEB
9.5%
3.5%
2%
0%
0%
26.5%
31%
27.5%
0% 10% 20% 30% 40%
Cash
Currencies
Commodities
Private equity
Real estate
Hedge funds
Fixed income
Equities
Previous Current
Sorc: SEB
6%
0%
3%
0%
0%
15%
31%
45%
0% 10% 20% 30% 40% 50%
Cash
Currencies
Commodities
Private equity
Real estate
Hedge funds
Fixed income
Equities
Previous Current
7/29/2019 Investment Outlook 1303: Springtime for equities
10/37
Investment OutlOOk - mARCH
Poroio ragy
-80
-60
-40
-20
0
20
40
60
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Equities Fixed income Hedge funds
Real estate Private equity Commodities
Currencies
perFOrmanCe OF DiFFerent asset CLasses sinCe 2000
r i i i Dcbr . iorica a
ar bad o h oowig idic:
Eqii = MS Word EU
Fixd ico = JP Morga Goba GB EU dg
dg d = FX Goba dg Fd USDa a = SEB PB a Ea EU
Pria qiy = LPX EU
oodii = DJ UBS oodii T EU
rrci = Barcaydg rrcy Tradr USD
Sorc: SEB
HistOriCaL COrreLatiOn OCt. 31, 2002 tO DeC. 31, 2012
equitis
Fixdinom
hdgfunds
ralstat
pivat
quity
commoditis
cunis
eqitis 1.00
Fi iom -0.0 1.00
h 0.68 -0.32 1.00
ra stat 0.83 -0.18 0.5 1.00
pivat qity 0.86 -0.32 0.6 0.88 1.00
commoitis 0.36 -0.21 0.6 0.32 0.3 1.00
cis 0.00 0.1 0.18 -0.03 0.03 0.0 1.00
rOLLing 36mOntH COrreLatiOns vs. msCi WOrLD eUr
-0,8
-0,6
-0,4
-0,2
0
0,2
0,4
0,6
0,8
1
200 200 200 200 2007 200 200 2010 2011 2012 2013
Fixed income Hedge funds Real estate
Pr iva te e qu ity Co mmo ditie s Cu rre nci es
Sorc: SEB
Sorc: SEB
iorica a ar bad o h oowig idic:
Eqii = MS Word EU
Fixd ico = JP Morga Goba GB EU dg
dg d = FX Goba dg Fd USD
a a = SEB PB a Ea EU
Pria qiy = LPX EUoodii = DJ UBS oodii T EU
rrci = Barcaydg rrcy Tradr USD
7/29/2019 Investment Outlook 1303: Springtime for equities
11/37
th
Ever since the start o the new millennium, markets
have been characterised by a weak period or equi-
ties and a strong period or bonds. Now that bond
yields are approaching zero per cent, perhaps it
is again time or a cycle in which equities lead the
way orward.
Er ic h ary h cry, boh h bod ad h oc
ar ha b characrid by car cyc, ha i, riig
or aig pric rd ha ha o xdd or or ha
a dcad.
Thi par i car or bod, which ic h ha
dorad rgar -yar cyc, or xap aig yid/riig bod pric ro h ary i ow. For qii,
h i pa o ch car rd i or irrgar.
Sic h Scod Word War, bod ad har pric ha
oi ri cocrry a car b ar or
boh a ca. Soi hy ha a cocrry, a
car bar ar or boh, wih pric rdig dowward.
Soi h bod ad oc ar ha od i dir
dircio.
Drig h ad qii xpricd a car b
ar, whi bod wr characrid by riig yid/ aig
ar pric: a car bar ar. ha i, qii b-
d ro high cooic growh ad oig opii co-
cd o po-war rcorcio a w a ab xchag
ra a par o h o-cad Bro Wood y. Thi y
aciiad iraioa rad. Mawhi riig iaio ad
hay dad or oa o ac capia pdig cad a
grada ri i bod yid.
h , hr wa a car bar ar or boh bod
ad qii. Th ai rao wa h rg i iaio, p-
ciay i h wa o h r oi pric hoc i . Toward h
d o h dcad, bod yid had b phd p o rcord
, ad cra ba rapidy bga caaig hir y ir-
ra. h hrhod o h ca a xra bo:
h cod oi pric hoc.
Sharpy riig ir ra aog wih dcraig cooic
growh ad grar craiy abo iraioa rad ar
h coap o h Bro Wood y i wh aycori hir crrci oa had a cary gai
ipac o oc ar. Drig hi bar ar priod i h
, or xap, h S&P idx o US qii by
or ha pr c i ra r.
ra ba racd rogy o highr iaio, hiig hir
y ir ra ad owig h growh i h oy ppy.
Thi rahr qicy cad iaio ad iaio xpcaio o
bgi aig i h ary , a rd ha prid drig h
bq dcad. Toghr wih a rwd pr i co-
oic growh, hi pad h way or a car b ar or
boh bod ad qii, which ad drig ch o h
ad hrogho h .
pii aog qiy ior wa ao d by h co-
ap o coi i Erop, yboid by h a o h
Bri Wa i Nobr , ad by h ch roio o h wih ioraio choogy (T) brahrogh i h
arrig ro.
rv o t qitis
Investment OutlOOk - mARCH
Divergent patterns in eQUity anD
FiXeD inCOme markets
The past century has shown divergent patterns or equity and xed
income investments, which have become sharper since the 97s.
The turn o the millennium marked the beginning o a historically
weak period or equities, but now they have a chance or revenge.
Sorc: Macrobod
7/29/2019 Investment Outlook 1303: Springtime for equities
12/37
r ha, h r dcad o h w ii wa doi-
ad by a ry r car bar ar or qii. ri-
ca S&P oc ar idx o ary pr c i ra
r ro ary i h prig o . Mawhi
bod yid coid o a, rig i pri pric gai
o bod i. Excp or h , h dcad
h aw h wor oa rr o har i or ha
yar, whi h oa rr o bod rcord. opard o
bod, aa rr i h oc ar wr h h o
gai o ay priod ic .
Th par o h US oc ar ic , or xap,
ha coy racd h par ar h Wa Sr crah.
B or gor bod, oa oia rr ic ha
b baiay highr (abo pr c) ha drig h
corrpodig priod ro o h id-4 (abo
pr c).
Th coid dci i bod yid ic h r o h i-
i wa d o ra acor:
) Th r-owr iaio ra ad ig ha hr wa a ri
o daio (a gra dci i pric).
) r h ia acia crii o , a growig ir-
aog ior i h rgig ar (EM) phr i
pig rp aig i h a orig bod o h US
ad ohr ED cori.
) hag i rgaio ha icrad h dad or xd
ico i by pio d ad irac copa-
i.
4) Th ac ha drig h acia ad cooic crii o
-, cra ba achd izab qaiai a-
ig progra i h or o bod prcha.
) Th brig o h doco (T) bbb i -, a
w a h prcdd o -, oowd
by ajor poiica draa drig -, wr a ri o
daaig ha cad ay ior o ragicay
icra h proporio o ri-r bod hodig i hir
poroio ad rdc hir proporio o qii.
March , har pric rbodd. Sic h, h MS
Word qii idx i oca crrci ha gaid pr c
ad h S&P idx pr c. Mawhi h dci
i bod yid ha coid, d by iga ro cra
ba ha hy wi pri i hir abiio o hp ai
cooi ad acia ar wih zro ir ra ad
bod prcha.
og y qio ha a aagr hod ow baig i whhr March ard h bgiig o a w
car b ar or qii ad whhr a a co-
qc qii a a i wi b ab o a rg
o bod. Th ar a ca wa a ar br i
drig h r dcad or o o h w ii.
cra cocp ha ca hp or aayi ad ab
o awr h qio i qiy ri pri (EP).
erp = co /h c ( ld)
u - o od ld.
pr, hi ri pri i ry high i h U.S. arod
+ pr c bad o h S&P a a r o ow har
pric rai o copay arig (yoyo wih high
arig yid ad ow pric/arig raio), aog wih
hioricay ow gor bod yid. Drig h po-war
priod, oy i h wr ri pri o qii a
ch high ( hogh bod yid a ha i wr
baiay highr ha oday).
id ro rcig xry ow bod yid, oday high
ri pri o qii rc ior ow xpcaio
abo cooic growh copd wih hir gra craiy
abo h cooic ooo. Ta oghr, hi ha rd
i owr xpcaio abo poia oc ar rr.
ohr word, qiy ior ar crry rca o pay ry
ch or ach i o copay arig. Th oppoi wa
r a i drig h ad , wh h ri pr-
i i h US occaioay droppd o a ow a -. pr c.
Drig h po-war priod, h arag ri pri i h US
ha b ighy poii.
Looig ahad, or ai cario i ha h ri pri wi
a ro i hioricay high h pri ha rary
ayd o high drig ay xdd priod. B whhr hi
occr aiy bca arig yid a (har pric ri i
raio o copay arig) or aiy bca bod yid
ri i o cor xry ipora o ior.
F, loo o odr h ag o hiory ic h i car; ar
hiry yar o aig bod yid, i i ow i or h yid
cyc o r pward. Thr ar ay idicaio, d p
i hioricay high bod aaio, ha a og-r pr
i h yid i ii ad ha a car bar ar or
bod i h abo o bgi.
rg i aor o hi ar h propc o graday
rogr cooic prorac or a a a w yar, d-
craig acia ri ha i h a a gor-
bod araci aog ior ad xpcaio
o owha high iaio ahad. Gray grar ri app-i, a w a grar opii abo acia a ar,
wi ao ca ior o bod ad by qii.
Th: g o h qii
Investment OutlOOk - mARCH
inFLatiOn anD interest rates OFten HanD in HanD
Ever-higher US infation caused yields on Treasury notes to rise
sharply during the three decades starting in the early 95s, while
lower infation since then has paved the way or lower yields. Since
the turn o the millennium, yields have allen urther mainly due to
other actors.
Sorc: Macrobod
7/29/2019 Investment Outlook 1303: Springtime for equities
13/37
Drig h x cop o yar, howr, ay pr i bod
yid i iy o b rahr od. Fir, by a idicaio ay
cra ba wi pri wih hir hioricay accoodai
oary poici or qi a whi. Scod, h ri o cary
highr iaio ar airy a a og a capaciy iiaio i
ow (which appi aiy o h ED cori). Third, -
ood ior ch a US hohod ha a rahr a
prcag o xd ico i i hir poroio
(abo pr c). Mawhi h Fd ad ohr pbic c-
or ar paricipa which wod o ddy arg
qaii o bod ow hod a pr c o a U.S.
Trary crii i circaio.
Th ai ri o or cario o ody riig bod yid
wod b rpriigy wa cooic growh copd wih
aca daio or xpcaio o widprad daio, which
wod ca bod yid o coi aig.
tu ow o quModra pr i bod yid i pig wih or cario
cod probaby b accopaid by riig har pric, i boh
h o rc iprod cooic prorac
wih oy ighy highr iaio xpcaio.
ay ad ior aray oc o daa acor
bhid oc ar rr, ch a h ooo or cooic
growh ad corpora arig, a w a chag i corpora
pro argi. pr, hr i a widprad prcpio
ha h acor wi o hp qii ry ch i h ar
r. Thi i d o xpcaio o coid ow cooic
growh i h wa o ca ariy ad pri drag-
ig by hohod, ba ad gor. Thi a
i cary rcd i h ow hioricay high ri pri o
qii.
Y i i ipora ha ior o oy oc o h od
ED idriaid cori, b ao icd h igicay
ar-growig EM phr i hir word iw. Largy d o
rapid ad accraig growh i h EM phr, accordig o
SEB orca word GDP growh wi rpa i rd ra (j
bow 4 pr c) drig 4. addiio, ora ca igh-
ig i h ED cori wi b a bi r i h ar
r, ad oary poicy i ra cori (Japa, h US
ad h UK) i hiig or oward hpig ai cooic
growh. Looig a rica hohod, which rai ipor-
a i a goba cooic prpci, i i ao worh oig
ha hir db a a prcag o ico ha a igi-
cay or h pa wo yar ad ha h a id o hir
baac h i gaiig rgh, d o riig pric or boh
ho ad acia a.
Vaaio ar aohr xry ipora acor or h oc
ar ooo. Thi i bca hiory how ha priod
characrid by igica dci i har aaio ri-
ig arig yid ad aig P/E raio ch a drig h
pa dcad or o, ha ay b oowd by priod o
rog har pric prorac. Looig bac, aohr obr-
aio i ha car bar ar o rd io car
b ar wh aaio wr ow, poy riig
ad ra ir ra (oia ir i iaio) ga-
i. Thi wa r i h prig o
Looig a h MS Word qii idx, oday aaioar bow hiorica arag. Th co orca or
goba corpora arig i growh o ary pr c or
h x oh. Th x-a P/E raio ( oh ahad)
wod h d p bow , copard o a arag o or
h pa yar. Shar aaio ha ar i o way chag-
ig ar a rhr arg why a car b ar ay ha
bg i ary , drig which arig yid wi h a
ad P/E raio wi ri.
Shor-r acor ha ay chag ch a poii qi-
i cario icd caaig diiy o US ca poicy, a
brig bod bbb wih harp yid pr iiar o wha
occrrd i 4, wy occrrig cooic ad acia
prob i h ro zo a w a diappoi ad
rgig ri i h hi cooy.
Cocluo: Gi h praiig ry high ri pri o
qii, hr i a highr ha ora probabiiy ha qii
wi proid hioricay good rr ro hir crr pric
. Gi h praiig ry ow ri pri o bod,
hr i ao a highr ha ora probabiiy ha bod wi
proid hioricay poor rr ro hir crr pric .
a cod.
Th: g o h qii
Investment OutlOOk - mARCH
LOW vaLUatiOns preCeDe
gOOD stOCk market periODs
Since the industrialisation wave o the 87s valuations (P/E
ratios) o S&P 5 shares, or example, have rarely been below
5 or above 5. The period around the turn o the millennium
was thereore rather unique, with P/E ratios substantially above
5 or a rather long time. Equities were unreasonably expensive
at that time, and valuations have allen signicantly since then
due to major stock market slides. Otherwise, periods o low share
valuations are usually ollowed by good stock market periods.(The extremely high P/E ratio in 9 was due to the collapse in
corporate earnings during that years nancial crisis.)Sorc: Macrobod
7/29/2019 Investment Outlook 1303: Springtime for equities
14/37
4
th
In economic theories, everything is rational. In
mathematical terms, it is simple is always .
But when we make decisions that involve di-
erent potential actions, we become uncertain.
Ater all, we have no grasp o the uture. Dierent
outcomes are possible and we are unsure. That
leaves room or both external and internal psy-
chological inluences.
W ha b iig i a acia crii or or ha a dc-
ad. Prhap i ha ad ogr. h pa yar,
qii ha had hioricay ow rr a ora/high ri.
Mawhi, ow-ri i (or, ra a, xd
ico ir c.) ha proidd high rr. So i a
priod i hi, o a ca ha grad ar ro
arag rr. Th ri/rr raio ha h o away b
coi wih og-r qiibri.
w ow ry o brig oghr pychoogy wih cooic
ac, w ay b ab o pr a dir id o dicio
abo wha w prci a ri oday. ow w iw ri i
bad pary o coo , pary o a hriic
(r o hb), b ao pary o or ow bia ad p-
ciay h bia o ohr. y acor i dciio aig i
h hrd. Whr ryo i hadd o ha a riorc-ig c. Th hrd, probaby qi righy, ha og d wha
i prci a high ri.
So o (hogh ar oo w) rbr h a ,
wh h oc ar had joyd aa rr o pr
c ic h . P/E raio wr high, b o ior
coidrd h aaio accpab. Th ooo or h
r o h ii wa ry brigh. Today, ar yar o
ow rr, wih P/E raio a arag , ay pop ay
aaio ar high. Th r oo ba i or par o h
word (Erop), which ha a ajor ipac o prcpio o
ri ad rr.
Throgho ha oio, or brai ha b codd i
ario way o r ria, i par by giig or ory
cio a crai rcr. For iac, i i air or o
rbr wha happd o rcy ad wha i iib
o . r xpric ad owdg ar ord i dir
par o or ory b ar o rrid qay aoai-cay ad qicy.
Th brai cra r o hb (horc) bad o or
owdg ad xpric b ao o how w prci ra-
iy. Sic raiy ca b prcid i dir way by dir
pop, w wi a ha a bjci iw o raiy. copay
har ca b coidrd xpi dpdig o j o h
pric ha day b o or ow xpcaio o i r pric,
coparai pric ooig bac i i ad pric o ohr
har. Tha i r ad o yaic rror o jdg
(prcocpio), which i ow a bia. o hb -
ay r i pry good dciio, b by or- ad dr-
phaiig h rac o dir ioraio, or coc-
io ar or or biad.
Bow w wi go hrogh o o h o coo r o
hb ad h prcocpio cocd o h. Th ai
o hi horica arg i o dri how w hod
a r rr ad hir aociad ri i h crr
ar. Do w ba or a o probabiii o ci-
ic grod, or do pychoogica acor ha a grar ipac
ha w hi?
r o hb i h aaiabiiy hriic, which a
ha dciio ar ad bad o how ay i i o d i-
oraio abo h ar a had. a hiig aboicraig h bod hodig i y poroio, y dir o do
o wi icra i ohr arod (pop, h dia) ar
ayig how good i i o ow bod.
ohr r o hb i h rprai hriic,
wih i accopayig rprai bia. a a ob-
jc away b aigd o a gi cagory? Pop ha hir
ida abo h ypica growh copay, h ypica coo-
i, h ypica ar o a rcio. w awhi igor
ohr acor, h r i bia. prai bia i
cocd o how pop away wa o aig pa-
r i hir iro ha corrpod o hir cocpa
cagori. Pop par i rado oco.
psyooia is o oomi isios
Investment OutlOOk - mARCH
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hird r o hb i h achorig hriic, which i
r i cocd o achorig bia. chorig a w
ha a iiia rrc poi, a achor, which i h ad-
jd rai o ohr aaiab ioraio. Scic how
ha adj ay d p big co o ha rrc
poi, o hr i bia i h dciio. Ta orca, or
iac. Thy away o b co o h gr ar
rpord. Th achorig bia a ha pop ar o pr-
pard or igica chag i hir rrc poi.
Prcocpio ao ari wh pop ora crai
idc ad dra ohr idc, which r i
warrad craiy i dciio-aig. Thi coraio
bia, a i i ow, ca ad o fci, coi acio.
iia dob ad proid a rao or icig o o
iw.
og wih r o hb ad hir prcocpio, hr ar
ohr pychoogica acor ha ic dciio aig
aid h craiy ha a qio abo h r g-
ra. W pciay dra h iporac o h hrd.
ri a ch a qii ha had high ri ad abor-
ay ow rr, accordig o h horica oio abow wi probaby o or bi i h hi o a or
ora priod. h ohr had, h bod ar ha g-
rad high rr a ow ri i rc yar ad, accordig
o hi arg, ry a. B wha happ i h
goba cooy ar o ipro ad ir ra gray
ri? Epciay i h iaio ipro i par o h word
ha ar o arby, b whr or id copai ha
igica opraio? W wi ha a hard i prciig
chag ahad ad acig raioay.
Th: Pychoogica ic o cooic dciio
Investment OutlOOk - mARCH
RdslaRdsla
PanikPanik
GirighetGirighet
OptimismOptimismPessimismPessimism
SkepticismSkepticism
FrnekelseFrnekelse
ManiMani
RdslaFear
PanikPanic
GirighetGreed
OptimismOptimismPessimismPessimism
SkepticismScepticism
FrnekelseDenial
ManiMania
tHe stages OF HerD beHaviOUr
Mental shortcuts (rules o thumb or heuristics) lead to systematic errors o judgement. When combined with herd behaviour, it is dicult to
perceive changes ahead and act rationally.
Indx
Tim Sorc: SEB
7/29/2019 Investment Outlook 1303: Springtime for equities
16/37
6
th
Capital markets have entered a new phase ater
the recovery that began eight months ago. With
the upturn conirmed, we now ask ourselves two
questions. Where shall we take risks today? And
what risks are worth taking?
Sdo ha o a co o yboi a priod a ch
a Eropa ra Ba Prid Mario Draghi ha do,
hrogh hi rba proi o do whar i a o pr-
r h ro ohig ha dora h d or
coidc i crii iaio. a or h o, hi
coidc ha gi bac ior hir ri appi. Soc
ar rai ha qicy d.
W ar i a growh pha, ad hi i gray good or
growh-dri i. W ha rachd a priod wh
h oc ar hod b h priary orc o rr.
Mawhi, a away, hr ar rao o b hogh wh
i co o xpcaio ad how w a ri ia oc ar-
. Forc o habi i powr i h i word (
ao h h aric, Pychoogica ic o cooic
dciio). Thr i rao o bi ha o o h pa-
r i rc yar wi o b rpad.
Cood ar o xap, whr w ay o
qi h a dop w ha bco acc-
od o. Th ar ar howig a ighy or caiopar ha bor. May ior ar oig o o god
ad ohr prcio a a hir ri appi icra. Thi
ay b rgardd a a good baror o h rcory w ar
ig i h word. Mawhi hr ar coiig oppor-
ii, or xap i crai prcio a ha ar or d-
pd o idria , ad pciay i pry idria
a. B w ay o h a dyai i coodi-
i ad coodiy-rad i i h r. To o
x, hi i cocd o hia hi ro prodcio- o
copio-dri dad. Th crrcy i i ao par
o h picr, ic h wa US doar ha aborbd o o
h pr i coodii, b w wi probaby a rra
o h dowward doar rd.
Ecooic growh i crry h driig orc or iacia
ar i o rgio. Erop rai a prob chid, b
i ra o chag hod b poii ro hi poi oward.Poiica adr ha ad coidrab progr i ip-
ig ica ariy, crr acco ar rogr ad
dad hod o ow dciiy, ic h word cooy
i gray oig i a poii dircio. ohr ipora
parar i ior opii ad coidc i poiica
adr o ario i. Th US iaio ha o b
rod, ajor p rai o b a oward Eropa
drai ad h iaio i orig xchag (FX) ar
ay bco a poiica i i h r. o hi i iy o
coi iiig i ad aciiy. h ohr had,
hr i araci poia i h xiig i ar rod i
a corci way.
ra ba coi o rira hir coi o p-
porig cooic growh. Th Fdra r poy-
arg i a ry car xap o hi. Th Eropa
ra Ba acio ha ao b ry car, ad prhap
h o i righ ow, ic h EB ha ard ch gra
coidc ha h ba i opraig ia pr ra rahr
ha ia iqidiy.
Equii ar h a ca ha hod bi h o ro
oday ar iaio. Today w ca o ha har aa-
io ha cibd a bi, ad wha wa qi chap ix oh
ago i or oraid oday. oparig oc ar a-
aio wih bod, howr, qii i chap. w
xd or prpci o ad bi hr wi b co-
id rcory, h poia or qii i good.
So whr do w a ri? Th pr w aw a i ad
ary i ca b iwd a h ir pha o h rcory,
h pha ha ay aor h o cycica copai.
pr w ar i a or ab pha, whr ar payr
ar ig good arig growh ad raoab aaio.
obid wih ow ir ra, hi a growh copa-
i wih iid dpdc o cooic cyc araci.
wat iss a ot tai?
Investment OutlOOk - mARCH
7/29/2019 Investment Outlook 1303: Springtime for equities
17/37
7
ori who oc ar dora good arig
growh cobid wih good aaio wi b i harpr o-
c. Earig growh wi b dri by icrad goba rad
ad doic growh. og araci pac whr hi wi
happ i hia, b ao Swd.
th od ha rachd a rig poi. W ha acoid poii iw o corpora bod, b w ha
o r ha h poia oday i igiicay owr ha
bor. W ar co o a ow poi i h yid gap bw
corpora ad gor bod, ad w or rr
or i i wih aca rig yid. B i i ipora o
phai ha h ogoig abiiaio o h cooy
hod p crdi ri dow owha, which i i
ab corpora bod o dir crdi qaiy o rai
araci.
a ca ha ha prd p i rc oh i hd
fud. P ipy, w ca diid hdg d aagr io
wo cagori: ho who d haroic, ab arad ho who hri i i o crii wih arg ar
o. Wha w ha i rc oh i ha
ar i gra ha ard. W ha o h a
highy oai par a drig crii priod, rig i
or raioa pricig. Thi i r ab highy aayica
d aagr o ar a br rr o hir ida. W iw
hi poiiy, ic w d arai a ca a a
oo o coro ri i or poroio.
Drig priod wh oc ar aaio ar aog
wih h cooic cyc ha i, wh growh abii ad
ipro ad oc ar ha priod o a hdg
d ar araci.
W or a br o good orc o rr oday. Th
poia i hr. W ha probaby pad h ir qic
rg ar h crii ad bor h abiiaio pha,
b o ry irig ig oday i icrad rgr ad
acqiiio (M&) aciiy, which idica opii. Pro-
ioa ar payr ar bgiig o a carr ri.
Th x p hod b a icra i capia pdig ad
iay highr poy. Th h wh wi ha ardpiig, adig o br ar prorac.
Th:: Wha ri ar worh aig?
Investment OutlOOk - mARCH
Historically, there is a high correlationbetween the purchasing managers index in
the US manuacturing sector and American
stock market perormance. Manuactur-
ing activity is again increasing (the index
exceeds 5), which may be an indication
that a new phase is beginning in the stockmarket.
strOnger signaLs FrOm manU-
FaCtUrers beneFit eQUities
Sorc: Macrobod
7/29/2019 Investment Outlook 1303: Springtime for equities
18/37
md cl
mco u
The world economy still aces many dangers
but the good orces are becoming more
numerous, paving the way or higher growth
Economic policy missteps are the main risk;
unexpectedly rapid recovery in the US and
China is the main opportunity
Dpi ay chag ad ri i h poiica word ad h
coid dragig d o hohod, gor ad
ba, h goba cooic growh ra wi icra i
ad 4. ra ba wi w oary i rcord,
rdcig acia r ad hpig ai a pric.
Mawhi oary poicy i a br o ajor cori i
ocig o br aiig growh, icraig h iihood
o hioricay ow y ir ra or a xdd priod.
addiio, h rcory i h US ad hia i ow o rr
grod, ad Japa big cooic poicy iiiai o ia
growh ad gra iaio i iy o hp i h goba
cooy, a a i h hor r. Erop, ibaac ar
idd arg b hy ar diiihig. Th copii o
Erop crii-hi cori i iproig ia owr wag ad
highr prodciiy, whi hir borrowig co ar aig. Th
iihood o a ro zo coap ha h dcrad.
Growig craiy abo word cooic poicy cod r-
h ad o a wor cooic cario ha xpcd, whirpriigy rog growh i h US ad hia wod a a
ar goba pwig ha i or ba cario ( pr c).
W ia ha h dowid ad pid ri ha a
qay arg probabiiy ( pr c)
Us coo h hd of olcl l d h Uid Sa, hohod db ha b rdcd o
ha ar aiab i h og r. Toghr wih h
coid ri i ho pric, hi wi b pria cop-
io. oig corcio i riig, ad a bi i
rbod i ao i h card. h hor r, howr, hr
wi b o car growh rg bca o ca ighig, which
w ia a . pr c o GDP hi yar. Nw ca poicy
rob po ad poiica aa ar h bigg ri o
or raiy poii US cario. W xpc GDP o grow by a
bi or ha pr c hi yar ad by .- pr c i 4.
D o ow iaio prr ad poy ha i xpc-
d o rai abo h Fdra r w oary poicybchar o . pr c or o i, h Fd wi hod o
i h prig o bor hiig i y ir ra.
crr bod prcha (USD biio pr oh) ar iy o
ha dd arir, bor h r o 4.
euo zo lowl fo loo
Ecooic aciiy i h ro zo o ha bood o
i a . Vario idicaor ha iprod i rc oh,
aog h prchaig aagr idic or ric ad
aacrig. Thi wir hr ha b a br o brigh
po i h Gra cooy, whi Frac ha dird diap-
poi. Mawhi hr i gra poiica craiy, h
baig y i o ihd haig ad ca cooidaio
i i dr way. h ohr had, ogh poiica dciio
ha b ad ad ca cooidaio i ario crii-hi
cori ha ad o progr. W xpc ro zo GDP
o a by ary . pr c hi yar ad o grow by ao
pr c i 4. Sic h ro zo ca crii ha bco
ac ad h borrowig co o crii-hi cori ha
a igicay, or a i ha h Eropa ra
Ba wi i r ra rai a . pr c i ad
wi ach o w oary poicy iiiai.
bh flo uol hh
h Uid Kigdo, ca ariy poici rai i pac.Toghr wih wa xpor, hi i hodig bac growh. r
a yar agaio, w i prdic ha Briih GDP ca grow
by abo . pr c boh i ad 4. cy, iaio
ha b rpriigy high, ad i i wi xcd h Ba
o Egad pr c arg or h ih raigh yar. Th
BoE wi h abai ro xpadd bod prcha ad a
i y ir ra chagd a . pr c i . r
Pri Miir Daid aro rc poicy pch, i i car
ha h UK wi hod a rrd o EU brhip i
i h orai ar h i i powr, craig gra cr-
aiy aog ay Briih copai or h i big.
nodc u l o doc raiy ggih goba rcory a ha h Nordic co-
ri ry o rogr doic dad copio ad
goo os a abot to ta t a
Investment OutlOOk - mARCH
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19/37
capia pdig i -4. Norway wi b aid by
boh h doic cooy ad h oi cor. Swdih growh
wi graday accra ha o rogr hohod prcha-
ig powr. Daih hohod ar qzd by high db ad a
wa ra a ar, whi Fiad wi g hp ha d-
ird ro h goba cooy. ra Nordic GDP wi grow by
ha . pr c hi yar ad or ha pr c i 4.
Fl fo J w cooc olcTh w Japa gor ad a yig ar i ,
wih a arg-ca ca i progra a w a a high-
r iaio arg ad pa or w a prcha by h
Ba o Japa. Expadd prcha, a w a prcha o
riir a, ay ao bgi ar h crr BoJ adrhip
i rpacd i id-March. a coqc o i a-
r, h y ha wad harpy, paig h way or highr
xpor ad ipord iaio. ra, w bi ha GDP
wi grow by abo . pr c boh i ad 4, b h
gor draaic cooic poicy iiiai rpr agab wih pbic cor ac. Sorig db wi xcd
pr c o GDP i 4, jopardiig Japa crdi raig.
Doc dd a coohogh ia rgig ar cooi ac coid
wa dad ro h US ad Erop, hi i o by good
doic dad argy dri by rog pria cop-
io. Mawhi ira-ia rad i growig i iporac.
aio i i bdd i h rgio, ad oary poicy wi
h rai accoodai drig ch o .
hia, poiica craiy icrad drig b i
ow diiihig. Thi wi hp ai boh capia pd-ig ad copio. Th cory ao ha cooic poicy
aorig roo ad ca ia h cooy a dd.
W prdic GDP growh o or ha pr c hi yar ad
.- pr c i 4. Th ri picr icd hia dip
wih Japa or o a iad, orbow ho pric ad
highr iaio. La i , w xpc h cra ba o hi
i y ir ra ro o . pr c.
dia cooic growh bood o a a. Sic
h, prchaig aagr idic i h bi cor ha
cibd. Bca o i arg dci, h gor cao
ca poicy o ia growh, b iaio add owhahi wir, opig h way or h cra ba o owr i
y ir ra o . pr c i Jaary. W prdic ha by
Dcbr h y ra wi ha b c i ag o pr
c. W ia ha dia GDP wi grow by or ha .
pr c hi yar ad pr c i 4.
mxd foc fo L acBoh GDP growh ad iaio owd dow i Lai rica
a yar, whi dci i h ora crr acco baac
ad pbic ac grw. Th ooo or h x cop oyar appar br i o rpc. GDP growh wi icra
ro pr c i o abo 4 pr c aay i ad
4, whi gai pbic bdg gr wi b ar ha
a yar. owr, crr acco dci ad iaio ra
wi icra i . og idiida cooi, hi ad
Mxico ad o i a poii igh, ad rgia i a gai
igh (h raioa Moary Fd i criiig h co-
ry d o rworhy acrocooic aiic)
e euo l, o owh u coi ar acro Ear ad ra Erop ha
b dprd idria op, aiy d o war d-
ad i Wr Erop. Mawhi hr ar ig o abiia-
io i cooic idicaor drig h pa w oh. Thr
i ig o or igh pr i Poad, h zch pbic,
Soaia ad gary. -4 w or or rapid
growh i ia ad Poad ha i ay ohr cori i
h rgio. So cra ad pciay ohr par o h
rgio ar or dprd. Th zch pbic ad gary
wi rg ry owy ro rcio, ad boh Soia ad
roaia ri GDP dci agai. aio i rdig owr i
o o Ear Erop, wih ia ad Urai a xcp-
io. Th grada rcory i h Baic cori wi coi,
hogh i wi b hay. Wa xpor ad ow capia pdig
appi, aiy i Lihaia ad Laia, ar haprig xpa-io ary i , whi pria copio i chggig aog
a a hahy pac. W or Baic GDP growh o abo .
pr c hi yar ad 4 pr c i 4. Laia i xpcd o
a h criria i i EB/EU aaio hi prig by wid
argi ad ca h cor o h ro o Jaary , 4.
th wold coo od fo ccloDrig -, word GDP (adjd or prchaig powr
parii) graday owd. La yar gr wa bow . pr
c. B arod h r o h yar, h goba cooy bga
a rcory. or a, hi wi ab word GDP o
grow by or ha . pr c hi yar ad a bi or ha 4
pr c i 4. Wih growh gr o .- pr c aay,
h rgig ar (EM) phr wi rai w ahad o h
ED, whr w or yary GDP growh o .- pr c.
Macro ary
Investment OutlOOk - mARCH
WHeeLs OF inDUstry rOLLing again
Especially in the US, but also in China, purchasing
managers in manuacturing are now signalling a
return to expanding activity. Many other macroecono-
mic statistics also show stronger underlying growth in
these countries, which we believe may lead to upside
surprises in the world economy during -4.Sorc: Macrobod
7/29/2019 Investment Outlook 1303: Springtime for equities
20/37
-40
-30
-20
-10
0
10
20
30
Dec-10
Jan-11
Feb-11
Mar-11
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
Apr-12
May-
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Month
12m rolling
mUtUaL FUnD investOrs bUying eQUities again
For a long time, investors have been making substantialnet withdrawals rom equity unds, both in Sweden and
internationally. The chart shows net fows into Swedish
equity unds that invest in Swedish and Nordic shares
in billions o Swedish kronor per month and over the
previous months. Equivalent data or global und
fows provide a very similar picture, with large with-
drawals in recent years recently having been replaced
by signicant deposits. We believe that this trend is an
expression o reduced worries about systemic nancial
crises and an eect o historically very low interest rates
and yields, which make equities look very attractively
valued in a relative perspective.
got is vaab
Ndic quii
Investment OutlOOk - mARCH
Sorc: Th Swdih Fd ociaio
Equii gi cig iv
r a og priod o big rjcd i aor o xd ico i, qii ha agai bg o
arac ior. Th a aiic how iow io qiy d boh i Swd ad iraioay.Thi ay w b a rd rra.
r of coco
Th iprod d ow ha had a draaic c o h oc ar o ar hi yar ad wi coi odo o, b ar a rapid pr hr ar ao away corrcio ad o o h wi probaby ariairy oo.
r luo fo owh co
Now ha h oc ar i bgiig o b acd by h ow rr rqir ha ha doiadh xd ico ar or ay yar, h ipac hod o b h a or a qii. gra
dowward adj i h rr rqir o qiy i wi ha a biggr ipac o ah highr ha arig growh i xpcd o b.
7/29/2019 Investment Outlook 1303: Springtime for equities
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Nordic qii
Investment OutlOOk - mARCH
nOrDiC eQUities are generating
HistOriCaLLy nOrmaL retUrns
0
1
2
3
4
5
6
7
8
9
10
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Percent
Earnings Yield
Dividend Yield
DiviDenDs enJOy HigHer priOrity,
at tHe eXpense OF investments
0%
20%
40%
60%
80%
100%
120%
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Percentofcashflow
Investments/CF
Dividend/CF
Sorc: SEB Mar
WLE TE ETUN EQUEMENT N FXED NME
crii ha a draaicay i h pa yar, hr
ha b ao o ipac o har aaio. Low ir
ra ha had draaic c o par o h ra a
ar ad ha grad grar ir i ohr i-
arai, b hogh qii ad bod ha
hioricay b ach ohr ai arai i,har aaio ha o b acd. Th arig yid,
ao ow a h ird pric/arig raio which how
h o arig ha id copai gra o bha
o hir harhodr i a pr c i h Nordic cori
oday. Thi i co o h arag or h pa yar. Th
arig ha harhodr coro ca ihr b raid i
copai, whr hy ca b d or i i r
arig or o rgh h baac h, or b dirib-
d dircy o h harhodr. Diidd yid, j bow 4
pr c i h Nordic oc ar, i ao co o ora, or
owha highr ha ora, copard o h arag
drig h pa dcad.
p h w fo low u rc yar, oc ar idic arod h word ha
oard ad pgd wih caig ior ri appi.
Worri abo w yic acia cri ha abad,
howr, ar igoro irio by h word cra
ba i rc yar o aoid ch cri. Thr ha ao b
igica rgaory chag, aid a abiiig h a-
cia y. Th baac h o ba ha rghd
draaicay copard o bor h Lha Brohr crah.
Thi ha pad h way or a r rdcio i h xra ri
pri ior dad i ordr o p hir oy io
qii. ioricay ora har aaio ad high bod
aaio a ha rai aaio o qii ar ow a-
racig or ri-ora ior o p a argr har o hir
capia io qii. or a, h harp pr i
word oc ar or h pa w oh ad h iow
w ha rcy io qiy d ar h bgiig o
a rd rra ha wi b qii. or ha prob-
aby ao bg o adj hir rr rqir or qii
dowward.
vlu of fuu c h o owr rr rqir or qii do o, howr,
a ha aaio o a har wi icra h a, a
big qa. Th pr a o a r arig ha
copai ar xpcd o gra ri i proporio o h
prcag o hi a ha i rhr ahad i i. Th
dirc i h pr a o o roa oday ad ro-or yar ro ow wi b i proporio o how ch
owr ir ra copaio ior rqir i ordr
o choo h ar arai. ohr word, h har o
copai ha gra arig growh wi gai ba-
iay or a ha ho o copai who arig do
o grow. Th ar h arig growh, h or pr
a wi b adjd pward a h rr rqir i
rdcd.
pl of ddd, u ho of owhroicay, hr i a ihr coic bw h dcy
i rc yar o aor qii wih high dirc yid ad
growh propc. copay ha ha good growh poiaordiariy d o rai a argr prcag o i arig i-
ray i ordr o a i dd or growh, whi
ho who poia o icra arig by a o i-
i or iid ar wi o ha a gro a diidd
poicy a poib.
W ca ao o ha i h pa wo dcad, Nordic id
copai ha graday gi highr prioriy o diidd (a
argr prcag o h cah ow grad by hir opra-
io i diribd o h harhodr), whi h prcag
o opraig cah ow hy r-i ha dcid. ardy
rpriigy, hi ao o ha ipacd growh i opra-
ig arig. Bca ow xpcd GDP growh i h x w
yar wi ao hapr h abiiy o ay copai o d
i opporii wih araci rr poia, w
bi ha hr wi b a horag o copai wih good
growh propc. Sch copai hod hir aaio
ri. W xpc growh copai o pay a adig ro i ay
pr i har aaio ar hi yar.
Sorc: SEB Mar
F = ah ow
7/29/2019 Investment Outlook 1303: Springtime for equities
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A oo ya iy i oba sto mats
Glbl quii
Investment OutlOOk - mARCH
COrpOrate earnings grOWtH anD pUrCHasing managers inDiCes signaL eCOnOmiC UpsWing
Corporate earnings growth and purchasing
managers indices (PMIs) correlate to stock
market perormance. Companies are continuing
to show good earnings growth. I earnings
orecasts hold, there is potential or higher
share prices. PMIs are heading upward,
indicating more positive sentiment among the
worlds purchasing managers. A gure over 5indicates expansion in the global economy.
a o o h
Th poii rd ha doiad goba oc ar i h cod ha o ha coid io ,wih Japa ad US oc xchag adig h way. Ergig ar ard o rogy i Jaaryb h ippd, ad ha prord wor ha h dopd ar
euo l ol
Macrocooic daa i Gray ad h Nordic cori oo proiig. W r iaioa copaiwi b ro a war ro ad ro haig a igica porio o hir a i a growig rgigar. Eropa a ad di-izd copai ha aggd bhid h oc ar ad harbod poia.
W fo dc foc fo qu 2013
br o acor crry bod w or qii. cord-ow ir ra ar driig ior o oo orhighr rr, craig a ow io qii ha w ha probaby oy h bgiig o.
Sorc: Macrobod
Sorc: Macrobod
7/29/2019 Investment Outlook 1303: Springtime for equities
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Goba qii
Investment OutlOOk - mARCH
SUMMNG UP 2012, T WLL G DWN N STY a a ry
good yar or oc ar dpi a air ao o cr-
aiy raig h acia ar. xiy abo Eropa
db prob, wa acrocooic aiic ad crai-
y abo hia r growh doiad h oc ar
ood drig h r ha o h yar, wih aig har pric
a a r. Drig h r, w aw growig ri appi,ad pric ro. brighr acro picr ad ig o rhr
i ro h US Fdra r ad h Eropa
ra Ba raid hop. cobr, o dob crp i,
d o poiica craiy (h US pridia cio ad
hia adrhip chag), b Dcbr oc agai aw i-
crad ri appi, ad h yar dd o a pba o.
Th goba qii idx ro pr c ad h rgig
ar (EM) idx ro . pr c i . Th rgig
ar howig h gra adac wr dia, og
Kog ad ia. Th US oc ar ro . pr c whi
Erop ora wa p . pr c, wih igica ariaio
bw cori. Th qii idx ho p pr ci Grc ad pr c i Gray, whra h Spaih
idx pr c.
so o h Th poii rd coid io , ad h word broad
idic wr gray p i Jaary. Th goba idx (MS
) ro by ao pr c, wih h Japa ad US oc
ar adig h way. Ergig ar ard o ry
rogy b h ippd, ad ora hy ha prord
wor ha dopd ar. ia, Shaghai ad og
Kog ha pod big gai, whra Brazi ad Taiwa ha
aggd bhid.
US acro aiic wr wor ha xpcd i Jaary, whi
h ro zo howd a ipro. Th gr or hia
ad ohr ia cori xcdd co orca.
Jaary , h US o o prai ad Sa pad a
coproi bdg bi which ard ico ax hi or h
ajoriy o rica hohod. ogr ao approd rai-
ig h aory aioa db ii i May, wh w ahor-
iaio wi b dd. Erop oc ar wr boyd
by h aacrig prchaig aagr idx (PM).
hia oo, h ofcia aacrig PM igad xpaio,
whi gr or GDP, idria prodcio ad rai a wr
rogr ha xpcd. Japa h gor aocd ai pacag o pd p h cory cooic growh.
Qul o uorpora arig rpor or h orh qarr o wr
coi wih xpcaio, which icra h iihood o
good arig poia i . So pr c o US co-
pai rpord arig i i wih or br ha aay
xpcaio. opai i T, hah car ad drab good
prord h b rai o xpcaio.
a goba bai, corpora arig i ar xpcd
o grow pr c, whi h orca i rgig ar
i highr ( pr c). US arig growh i projcd a
pr c, whi h gr or Erop i ighy highr a pr
c. Soh Kora, Taiwa, Thaiad ad Brazi op h i, wih
arig xpcd o ri hi yar by - pr c.
Vaaio hod b coidrd araci, ar broad
oc ar gai, wih goba qii radig a a ora
pric/arig raio o i orca arig or . Th
US ad Japa brig ha gr p, wih P/E raio o 4 ad rpciy, whi Erop i radig a i orca
arig. Ergig ar ar i iwd a chap, wih
a P/E raio o .
ycica cor wi how br ha arag arig growh
or . opai i coodii, acia ric ad
h idria cor wi h a growh (, ad
pr c rpciy), b drab good copai wi ao
how arig growh o a pr c. cora, d-
i cor ch a rgy, pharacica ad co-
icaio ha bow-arag arig growh.
Focu o cclcl d ocTh oc ha b o di cor, b i or iw i i
i o icra xpor o cycica cor, whr arig
co-ary wih h gra cooic rd o a arg x ad
ar arig growh i xpcd. Sch cor ar idria,
coodii ad cor good.
W coi o highigh ia ad rgig ar a arac-
i i, gi hir high growh ra. addiio o
hia, w ha a poii ooo o dopd cori i
ia wih igica poia, or iac doia, Maayia
ad Thaiad. Ear Erop i ao a araci arai,
wih ow aaio ad high growh, ad hod b icdd i
a goba qii poroio.
mo euo qu ou ofolo
hogh orig db prob pri, h car wiig
o poiica adr o d oio aor hi rd. Erop i
a wo-pd coi, wih h db-ridd cori o oh-
r Erop o o had ad a br o hahy cooi
(Gray, h Nordic) o h ohr. Macrocooic daa or
h cod cagory oo ch or proiig, ad w r
iaioa copai hr hod b ro haig a
igica porio o hir a i growig rgig ar.
war ro ao p or wid i hir ai. Eropa a
ad di-izd copai ar araci i ara-i, ic hy ha aggd bhid h oc ar rd.
2013 ood fo quW or dc oc ar prorac i .
Earig growh orca o arod pr c idica
gra poia. pr, a br o acor bod w or
qii. Sab acro gr ad h wiig o cra
ba o p ar iqid proid rhr poii iga.
cord-ow ir ra ar driig ior o d rr
ohr ha hrogh bod, graig a ow io qii ha
w ha oy h bgiig o. Goba id copai
ha rcord-rog baac h, ad arig orca or
ad 4 oo proiig. W ar i a pha o rao-
ab copay aaio, proidd growh orca hod.
7/29/2019 Investment Outlook 1303: Springtime for equities
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4
Th ory Mod i a qaiai crig od. baica-
y coi o a crig o aay orca o h oowig
acor a copai:
. Earig growh
. Earig riio
. r o qiy
4. Mar aaio
. Diidd
Bhid hi cio o acor i a dy corig h yar-, whr h abiiy o ach acor o proid gi-
dac i chooig har ha b did. acor ha ha
grad poii rr ad dorad coiiy i i
prdicabiiy ha ard a pac i h od. a acor ha o
grad a rr or ha b oo crai a a idicaor, i
ha b xcdd.
addiio o h aayi o ach idiida acor, w ha ao
aayd iracio bw h acor i h od. wo
acor gra xciy iiar r, i a ha i o
o h i wrog h cod i probaby wrog a w. For hi
rao, gra car ha b a o iii h co-ariaio
bw ariab i h od.
Th riw icd copai wordwid wih a ar capi-
aiaio xcdig EU iio ad oiord by a a
ix aay orgaiaio. opai ar cord rai o ach
ohr bad o ach acor, h a o ach copay acor
cor ar addd p o yid a oa cor. c corig i do
a copay , w cra a cor a cory a a ar-wighd arag o a copai wih h a doici. Th
oa cory cor i h d o ra h cori.
W ha bad h od o oc ar, o acrocoo-
ic. hi way, w ar br ab o capr h xporr
i ario ar. Th od i o cor ppd wih
qaiai daa acro a bor adig o
rcodaio or bcoig h bai or poroio aocaio
dciio.
Investment OutlOOk - mARCH
A companys earnings, its growth and valuation and the markets expectations are actors that aect itsstock market perormance. It is thus relevant to stay updated on how these actors evolve, both in absoluteterms and in relation to other companies. In light o this, SEB Investment Strategy has looked closely at anumber o actors that have historically proven to be good guides to stock market perormance. Based onthis, we have also designed an allocation model, the Country Model, whose purpose is to support the man-agement o global equities.
ig hi, howr, i coid craiy abo o-
rig db prob i h ro zo ad h US. Qio
abo h US db ciig ad ca ci wi hag or h
ar drig h prig. Th cooic rcory ra i hia
ad codc i h acio o i poiica adr ar ao a
ca o cocr.
To ari, w oc ar rdig a i h hor
r ar a ry rog prorac i ad io Jaary
. ahogh hr ar o dob abo h rgh o
h cooic rcory. aid ar ray goig orward
wi dpd o growh o i ia ad h idr-
iaid coi ad o h wiig o poiica adr o
ro db prob. corpora arig orca ar co-
rd, i wi a abiiaio ad poiay good rr
i h word oc ar or h r o h yar.
T coty Mo
Landmodellen Kvantanalys
Mikroekonomi
Bolag Land
Ranking
Marknadssyn SEB House View
Fundamentalanalys
Macroekonomi
Tema Land
Outcome
Exposure
Product
The Country Model Quantitative analysis
Microeconomics
Company Country
Ranking
Market view SEB House View
Fundamental analysis
Macroeconomics
Theme Country
Expo
Produ
7/29/2019 Investment Outlook 1303: Springtime for equities
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Goba qii
Investment OutlOOk - mARCH
TOp Three
rai coty rasoi
1 ia igh cor or ar aaio ad arig riio
2 Swd igh cor or rr o qiy ad diidd
3 Poad igh cor or arig riio ad high cor or ar aaio
rAnkIngS FOr MAjOr MArkeTS
rai coty rasoi
5 Soh rica igh cor or rr o qiy ad high cor or diidd
6 Gray aiy high cor or ra acor
doia igh cor or rr o qiy ad arig growh
8 Norway igh cor or diidd
10 Try igh cor or rr o qiy ad arig riio
12 dia igh cor or rr o qiy, ow cor or diidd
13 Fiad Low cor or arig riio
16 Uid Sa rag cor ro arig riio ad rr o qiy
1 hia rag cor or ar aaio ad rr o qiy
regIOn weIghT* reASOnIng
goba Eqii ar raoaby ad, proidd ha arig orca pro cor-rc. oraio i dirab i ordr o achi grar abiiy.Br acro, ab arig ad ow io h oc ar wi proidgood poia.
eo Sciiy! hoo Gra ad Nordic xporr ha wi b ro awar ro ad ha ha a igica prcag o hir a i rg-ig ar. Sa ad di-izd copai ha aggd bhid.
uit Stats Macro daa ar raiy ab, which ha arady d o a rog ar.Ucraiy abo h db ciig ad h ca ci wi r-rg.
Asia/eM s priary growh i. Foc o ia, aiy hia b ao ch dopd cori a doia, Maayia ad Thaiad. EarErop i ao araci.
jaa Th gor i pacag ha d o rog oc ar pror-ac ad a harp dci i h crrcy.
Th ory Mod i o o ra aayica oo ha w
wh aocaig goba qiy hodig o ario cori/
rgio. To obai a or hoiic iw, howr, w ao d o
a io acco ch acor a ri, ar ood, ow ad
acrocooic daa. ia d p a h op i h ory
Mod, wih high cor bca har aaio ar hiori-
cay ow ad arig ia wr rcy adjd pward.
Thi wi r i a orwighig i or aggri poroio
b o i or radiioa poroio, ic ia i highy d-
pd o oi pric rd ad w bi ha oi pric wi
b chagd i h idia r. Gray i highy rad
i h od. W wi happiy choo Gra xporr, which
wi ao b ro a war crrcy ad igica a
o a-growig rgig ar. Th rica oc ar
co i airy high i or raig, b w ar chooig a -
ra wighig hr, ic poiica craiy abo h db
ciig ad h ca ci wi hag or h ar hi prig.
* Weight shows how we currently view the geographic areas 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 a region.
Sorc: SEB
Sorc: SEB
7/29/2019 Investment Outlook 1303: Springtime for equities
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6
Fxd co
Investment OutlOOk - mARCH
T bst tim o f iom as t
stabLe spreaDs betWeen HigH yieLD anD gOvernment bOnDs in Us anD eUrOpe
Rising government bond yields will prob-
ably not widen the spread to high yield
(HY) corporate bonds.
) The yield increase is expected to bemodest.
) A aster yield increase than expected
would probably be the result o an
unexpectedly strong economy, which as
such is good or HY companies and their
bonds.
) In our basic scenario, macroeco-
nomic prospects are avourable, meaning
growth high enough to bolster corporate
earnings and keep the number o bank-
ruptcies in check, but not so high that
infation and government bond yields will
surge.
Wd: Cl oo fo c jo
Th acia ad cooic crii ad accopayig pbic cor dci ha pdd h diiio oabor bw ca ad oary poicy. Whi pbic ac ar big ighd, cra ba gororar ow aig or h a o rig growh.
th w o olc h coo d
For a a h x wo yar, h w oc o oary poicy wi b h cooy, a h ri o abac o growh diiih. Tha bod w or ri a ar.
th fo xd co w h
rc yar, gor bod yid ha a rapidy, whi corpora bod yid ha a orrapidy, which i why xd ico i ha arg pric icra. Tha ra i or.Now i h i o owr xpcaio.
Sorc: Macrobod
7/29/2019 Investment Outlook 1303: Springtime for equities
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7
Fixd ico
Investment OutlOOk - mARCH
F LNG TME, h ai goa o idpd cra
ba wa o gh iaio, whi ca poicy wa aid a
rig poy ad cooic growh. owr, h
acia ad cooic crii o - pdd a ha.
Fir, ca ad oary poicy ar wr adopd o a
prcdd ca o a h goba cooy ad i -acia y. c cooic rcory bga, harp bdg
c wr acd o rdc gigaic ca dci ad ow
h growh i gor db.
Th ro o crig aid growh wa h hadd or
o oary poicy, which i ay cori wa doiad
by a cobiaio o zro ir ra ad xpadd qai-
ai aig (oy bod prcha). Thr ha h b a
dcy or oary poicy o b poiicid ad caid,
wih cra ba ch a h Ba o Japa, h US Fdra
r ad h Eropa ra Ba big bjcd o
poiica prr. Moary poicy i hror w o i way
o aig or h ro o ca poicy i rig poyad growh, b o op o hi h cra ba ar big
orcd o accp h ri o highr iaio.
For a a h x wo yar, hi oary poicy roio
wi b airy poii or h cooy. Th hra o growh
bac i aig, o h b o a ar prorac.
owr, iaio xpcaio wi probaby b adjd
pward a i rhr ahad. Tha i o o h rao why
gor bod yid i ay cori hod ri i h
og r. Mawhi, oy ar ra wi rai a hi-
orica ow a og a y cra ba ir ra rai
ow i h US, h ro zo ad Briai i ad iJapa probaby ogr ha ha.
arg or highr gor bod yid i -4
i ha h acia ri i h word ha diiihd. Thi
ad h propc o hahy ri appi ar cooig ior
ir i gor bod. owr, bod yid icra
wi b rahr od. h hor r, iaio xpcaio
oo o rai airy ab. ca iaio wi rai ow
or a og i bca o xi ac i h cooy,
icdig high poy ad ow capaciy iiaio i
copai. Th dagr o iaio dri by oary aigi iwi ow, a og a ba dig do o xpad o ay
apprciab x.
, i i corpora bod grad a rr
o arod pr c or or i h high yid (Y) g
ad abo pr c i h i grad (G) ar.
Propc or ch or od. Th yid prad
bw corpora ad gor bod arrowd co-
idraby a yar, whi yid o gor bod (h
doiaor i h yid prad) ar projcd o ri a bi hi
yar. Thr wi h b ry iid roo or rhr icra.
Thi i pciay r o G bod, which cod a pric
dci i . Y bod pric ar xpcd o o dr-ig h yar a a r o h yid prad arrowig by abo
a ch a gor bod yid ri. Th rr o go-
r bod wod h iay b qa o h rig
yid; ab bow.
Y bod, oghr wih rgig ar db, ar i h
o araci xd ico i arai. igh
rig yid ad h poia or o pric icra o
EM bod i cojcio wih a igh a i bod yid bod
w or EM db. oca crrci, xpcd rr cod
copar aoraby wih Y; rcacad i ED cory
crrci, hr i ao poia or o orig xchaggai a w.
ASSeT clASS weIghT* expecTed reTurn
nexT 12 MOnThS
rISk
Sek eur uSd
Tasy bis 0.8% 0.05% 0.1% 1.6%
govmt bos 1.6% 2.1% 1.9% 6.2%
Ivstmt aooat bos
3.0% 3.0% 3.2% 7.3%
hi yi ooatbos
7.2% 7.2% 7.2% 11.0%
emi mat bt 6.6% 9.8% 11.6% 7.8%
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 dier rom our long-term strategic
outlook or the asset class.
7/29/2019 Investment Outlook 1303: Springtime for equities
28/37
dg fud
Investment OutlOOk - mARCH
Btt ottia at a to
retUrn pOtentiaL inCreasing as market CLimate imprOves
A risk-on market and decoupling
rom political measures contributed
to a positive perormance or most
strategies in the ourth quarter.
Macro/CTA had a tough , but we
dare to hope or a more positive per-
ormance this year. A more avour-
able climate points toward hedge
unds continuing to generate returnsin , although perhaps not as
substantial as in the ourth quarter.
94
96
98
100
102
104
106
108
110
112
20
11-12
20
12-01
20
12-02
20
12-03
20
12-04
20
12-05
20
12-06
20
12-07
20
12-08
20
12-09
20
12-10
20
12-11
20
12-12
20
13-01
HFRX Global Hedge Fund Index HFRX Equity Hedge Index
HFRX Relative Value Arbitrage HFRX Event Driven Index
HFRX Macro/CTA Index
a dcul o
Wih rog ri-o/ri-o bhaior i h acia ar, wa a difc yar or hdg d
aagr o aiga. Thi bhaior graday ad drig h orh qarr o , ad i xpcdo b a or aorab yar or hdg d i gra.
vull h ol 2013
Th ar oc i graday hiig oward copay daa ad or oraid cooiccodiio ad corraio, which b Eqiy L/S ad ai Va. opai wih rog ac adow growh poia hod gag i corpora acqiiio, which aor E Dri.
mco/Cta cou o chcc
Dicrib rd i h crrcy ar, aog ohr, bod w or Macro/T, ad w i bi haT (whr h aagr dig copr od ha i r gra raacio) ha a pac i iorporoio gi i diricaio characriic. Thi yar w ar ao hopig or a poii abo rr
ro h aagr.
Sorc: Macrobod
7/29/2019 Investment Outlook 1303: Springtime for equities
29/37
Investment OutlOOk - mARCH
dg d
STrATegY Index perFOrMAnce % (uSd)
2013 YTd Q4 2012 2012 2011 2010
goba h hFrx goba h F 2.52 0.80 3.51 -8.87 5.19
eqity h hFrx eqity h 3.75 1.37 4.81 -9.8 8.92
rativ Va hFrx rativ Va Abita 1.60 0.79 3.62 -4.00 7.65
evt div hFrx evt div 4.16 1.01 5.96 -4.90 1.98
Mao hFrx Mao 0.33 -0.12 -1.00 -4.88 -1.73
Sorc: SEB
TE FUT QUTE ENDED N PSTVE TETY or
o hdg d ragi, d by FX E Dri ad
FX Eqiy dg, wih gai o . ad .4 pr c rpc-
iy. FX Macro/T rd i h poor prorac,
dciig by . pr c or h qarr. Sig p a
a who, h picr wa rahr iiar, wih FX E Dri
h b prorr (. pr c) ad FX Macro/T hwor (dow pr c). Th broadr ora FX Goba
dg Fd dx dd h yar p . pr c.
equ Lo/sho had a dc yar dpi wig bw
poii ad gai i i wha bca ow a
ri-o/ri-o bhaior. br o acor poi oward
orig br poia or hi ragy. Fir,
hr i a o o a abo h Gra oaio, which io
ar payr aig oy ro h a bod ar,
gi h xry ow yid hr, ad riig i i
ir i qii, which ao a payr ar dr-
wighd i, pciay i h Eropa ar.
Fd aagr ha gray icrad hir xpor o
qii, ahogh h ray w aw i Jaary wa owha
rpriig. Whi h co ooo o b ha i i
i or a hor-r ar corrcio, h ag w ar
gig ro or aagr i ha hr ar ig o a co-
oic rcory ad daa ar oc agai arig o
wor, which obioy a hig air or oc picr
a wa h ca i Jaary. hogh goba cooic growh
i odra, h oc ar i iy o rai dcopd
ro h cooy bca o coid oary i.
W i prr aagr wih h abiiy o proc capia,
ahogh w ar caio abo aagr wih a orcycica y.
Rliv Vlu had a good a qarr ad a yar ha
dd p . pr c. rdi prad coid o arrow
drig h qarr, ad a doih ac ro h Eropa
ra Ba i paricar bodd aagr who dard
o hod a izab xpor i yar-d.
W ar i poii oward hi ragy, pciay Fxd
Icm Rliv Vlu ad Cd Lo/sho. r a priod
o ow oaiiy, hr hod b grar poia i a ar
ha i owha or diriad ad which aor
daa rarch o a grar x. poiica adr
ar ab o hi hir aio ro crii aag, or
oca cooic propc hod aow pro o b grad
o chag i h yid cr.
e D ro . pr c i h a qarr ad .
pr c or h yar, aig i h b ragy. W habco or poii oward broad ada, whr a-
agr ca wor wih ad d poia i a copay oa
capia rcr. May copai i ha good acc o
chap oa ad ha hir har pric jp. Sic ch
o h icra i copay aaio ro a rdcio
i addiioa ri pri a h iaio i h ro zo
ha abiid, ar payr ad corpora xci
oc or o growh poia or copai. So wih goba
cooic growh airy od, i i o iry raoab
o a icrad corpora acqiiio aciiy, craig
aorab codiio or d aagr.
mco d td had a bad . FX Macro/T .pr c i h a qarr ad pr c or h yar.
wa wor or T FX Syaic Dirid, which o
. pr c i h a qarr ad a ch a .4 pr c
or h yar. or Macro ragi, h arag rd i
airy ioraio or ior ic hr ar or-
o dirc bw d aagr. Th poi hr
i o ha h righ d rahr ha acicay icra or
dcra oa xpor. i-o/ri-o ha b a pri-
h i , which dd ri-o, ad o wod
arg ha h EB o ay iiad h ri o h
ro di. Macro aagr ha b orcd o a
dcad g abo cra ba o ad hir co-qc ad ha ocd o ri coro. T d ha
o had ay good rd or o a a bai or hir
horica od. Propc or h coig yar hod b
owha or aorab, ic h ri-o/ri-o rd
hod a wih acio ro cra bar/poiica
adr, which i r hod ad o corraio bw
a ca. Trd i h waig Japa y, Swi
rac ad Briih pod cod ad o br opporii
or yaic ragi. W i bi h ragi add
poii characriic o h poroio, ad o op i o w
ay ow poiby a br abo rr a w.
7/29/2019 Investment Outlook 1303: Springtime for equities
30/37
Investment OutlOOk - mARCH
Rl
T sit as is atit is
tOWarDs rising transaCtiOn vOLUme?
Transaction volumes increased mar-
ginally in , and oreign investor
interest declined slightly.0
20
40
60
80
100
120
140
2 00 1 2 00 2 2 00 3 2 00 4 2 00 5 2 00 6 2 00 7 2 00 8 2 00 9 2 01 0 2 01 1 2 01 2
Transactionvolum
e,
SEKbn
Cross-border Local
L co olu h fouh qu of 2012 dc w d
Gobay, raacio o icrad argiay a yar, b h orh qarr ao accod or
pr c o oa raacio o or h yar.
Coud o lqud
wih ohr ri a, h ra a ar wa acd by h caig craiy ha hadoiad h i cia i rc yar.
gow od wll fo cod wh u
h cooic rcory coi ad ri appi pic p, or pio d, iiio ad priaqiy r wi probaby aoca a growig har o hir hodig o h ra a ar.
Sorc: Macrobod
7/29/2019 Investment Outlook 1303: Springtime for equities
31/37
a a
Investment OutlOOk - mARCH
TE GLBL PPETY MKET WS MNG a yar
wir, ad h goba ET idx (GP ET) dd
h yar p . pr c i oca crrci. Eaig cocr
abo acrocooic ad poiica ri, cobid wih
h aid ow ir ra cia, bord i
aciiy cary doraig ior growig ri app-
i or corcia propri i h orh qarr. Gobay,raacio o icrad argiay a yar, b h
orh qarr ao accod or pr c o oa ra-
acio o or h yar.
wih ohr ri a, h ra a ar wa acd
by h caig craiy ha ha doiad h i-
cia i rc yar. Largr ad or iqid ar
ha aracd h o ior ir, hpig ph p
pric i h o-cad priary ar o araci
ry . Liqidiy ad ow oaiiy, which ar y charac-
riic o priary ar, ha joyd prioriy or rr.
oidrig h xry ow rr o gor cri-
i oday, ior ha b orcd o oo or araiway o gaiig xpor o a rr.
Dpi acia worri i h ro zo, h Nordic ar
coid o how abiiy. Boh dad ad raacio o-
aagd o aoid h abrp caio whr
arod h word, dpi or iid acc o capia ad
icrad ri ario aog ba ad ior. Prr
o priary ar i h Nordic capia ha qzd r-
r ad coribd o a pric dci i codary ar.
owr, coiig cocr i h ro zo acia ar-
ha a ha a hriig br o corcio projc
ar big achd or pcai prpo.
La yar, oa raacio o i h Nordic cori
icrad argiay ro i . owr, o dr-
ig h orh qarr accod or roghy 4 pr c o h
oa, which ay idica a igica rd hi. iio
h wih capia ar bhid h raacio, boh a byr
ad r. or ha oy b ird i rid-
ia propri wih ab cah ow ad ofc propri i
good ocaio. Thir ir i cray ocad propri
wih high occpacy, a i h goba ra a ar, ia c o h arch or ab rr wih ow oaiiy.
Propri i h codary ar ar h hardr o g
dig or, which ha ao coribd o owr raacio
o. Pric diria bw priary ad codary
ar ha widd, which i ao rcd i r .
hogh goba raacio o i icrad oy
argiay copard o , a br o acor poi oward
ab growh i , accordig o Jo Lag LaSa. h
cooic rcory coi ad ri appi pic p, or
pio d, iiio ad pria qiy r wi prob-
aby aoca a growig har o hir hodig o h ra a
ar. Fro a cycica prpci, hr i ao rao o b-i ha coid ipro i ri appi oghr wih
r ir ra hi cod hp ad o o raocaio
ro ir ra ri o propri wih ab rr.
Th gra poia i probaby i h Norh rica ofc
ar, whr o i xpcd o ri - pr c dr-
ig h yar accordig o Jo Lag LaSa. Th US hoig
ar prord w a yar, accordig o h Naioa
ociaio o o Bidr/W Fargo oig Mar
dx, a ohy ar o bidr i. ha b
riig wiho irrpio ic pri ad i ow a i
high ic pri , cary a ipora idicaioha h codiio or a aid rcory ar i pac.
Us HOUsing inDiCes LeaD tHe Way
The trends in the GPR 5 REIT Index and the Na-
tional Association o Home Builders housing index
in the US have been moving in the same direction
since mid-. However, the NAHBs trend shit in
5 preceded a similar shit in the GRP 5 REIT
Index by about a year.0
100
200
300
400
500
600
700
800
900
2003-02
-28
2004-02
-28
2005-02
-28
2006-02
-28
2007-02
-28
2008-02
-28
2009-02
-28
2010-02
-28
2011-02
-28
2012-02
-28
USD
0
10
20
30
40
50
60
70
80
Index
GPR 250 REIT (LHS) US NAHB Index 2013-01-31 (RHS)
Sorc: Macrobod
7/29/2019 Investment Outlook 1303: Springtime for equities
32/37
p qu
Investment OutlOOk - mARCH
Ias is-tai bos o ist pe
strOng perFOrmanCe FOr risk assets in 2012
Last year was dominated by sharp growth and high volatil-ity or risk assets. The listed PE index was among the win-
ners, along with nancial shares. However, calculated or
the year, the trend or listed PE companies had a signi-
cantly lower standard deviation (.4 versus 7. per cent).
During the same period, the index or listed inrastructure
had a standard deviation o .4 per cent, compared to
. per cent or the broad equities index (MCI AC World in
local currencies)
so h coud o hh luo
Th idx or id pria qiy (PE) copai (LPXT) dd a yar p .9 pr c ad aa growig ri appi ha coid io h w yar.
icd - cou o cd c
Th growig ri appi a a brogh or ci pricig, h craig a widow o capra grad by ar i.
Cuou - houh ld fucu
rarcr i, wih hir ow ba, ha poia o corib good diricaiocharacriic ad araci ri-adjd rr.
Sorc: Macrobod
7/29/2019 Investment Outlook 1303: Springtime for equities
33/37
Investment OutlOOk - mARCH
Pria qiy
TE MKET VGU FST SEEN N MD2012 how o
ig o dig. Erop h ora ar ha b doi-
ad by or rrici ba dig. igh poy,
cobid wih high db , ha crad wco
io. h US, worri ha crd o h poiica i-
aio hr, wih h a cio ad o rcy h
bdg i a ri caay. Th prob i h ro zoar ar ro rod, b a h o h ar appar
o b co wih h progr big ad. Th iigrop
Ecooic Srpri dx or Erop i a a hiorica high,
which idica h ar ha ry ow xpcaio or h
cooic daa big rpord.
Wih i rc harp gai, h oc ar ha b doi-
ad by high oaiiy. For radiioa qii a w a id
PE, hi ha a prciio i pricig, which i rc
yar ha d o gray owr raacio aciiy. Fwr
P, rgr ad acqiiio ha iid opporii or
PE copai o rai a grad.
owr, ha ard o w, ad i h US a br
o ajor corpora raacio ha b rgird. Th
izab raacio cod b a ig ha aciiy i h a-
cia ar ha ard o iiy. Th growig ri appi
a a ha brogh or ci pricig, h
craig a widow o capr a grad ro ar
i. a r, ay PE copai ha rcy
achid cc xi.
par o aig dico o dryig a a
(NV) wa dcribd i h a i o Investment Outlook
(pbihd Nobr , ). Dico o NV aidic h acia crii ha hr hi a ca, ic
dryig a graio ha b orhadowd by
pricig dri argy by ri ario. PE copai ow i-
craigy choo o dirib hir a grad o har-
hodr, or iac hrogh har rprcha or poroio
iqidaio. appar ha icrad aciiy ha ard o
hp rdc h arg dico.
W ha prioy argd ha hr i a rog corraio
bw id PE ad h idx or acia har (S&P
Fiacia dx). Sic yar-d, h idx or PE copa-
i ha b o o h rog prorig cor, ad
acia har ha how a iiar rd. La a
rog prorac brogh highr aaio, ad SEB Lid
Pria Eqiy, or iac, cho o poiio i or d-
iy. So ar hi yar, ha caio poiioig ha a
h d i p ao ha a ch a h broad idx orid PE.
og id PE copai, or xap, SEB Lid Pria
Eqiy aoca i pria qiy xpor hrogh id PE
poroio, pbicy radd copai corod by PE r
ad id aag copai. cy, h rd ha
b rogy dri by wha ar cad pcia iaio,
which ari hrogh dirc i i pbicy radd
copai corod by PE r. PE r idiy rab
copai whr hy ha a good chac o rig arod
h proabiiy o h bi by riwig acor i co
rcr, prodc rag, diribio, arig or pricig
ragy. a r, hi yp o hodig i or dcopd ro
gra ar o (owr ba) ha, or iac,
id aag copai.
a ior wa o caioy icra poroio ri, id
irarcr i a araci opio. rarcr ca b
bro dow io or broad cagori rapor (o road
ad airpor), qip (ch a powr raiio ad
diribio), coicaio ad ocia irarcr (ch
a hopia ad choo).
rarcr a ar characrid by hir high capia i-
iy ad og ric i, which ao hp cra igicabarrir o ar ry. Th characriic gi h a
a di rr pro i r o iiiy o bi
cyc, ad ao or o procio agai iaio ic
ay irarcr a idxd rcr. Wih
hir ow ba poia, irarcr i corib
good diricaio characriic ad araci ri-adj-
d rr.
7/29/2019 Investment Outlook 1303: Springtime for equities
34/37
4 Investment OutlOOk - mARCH
Mtas atst ottia i t asst ass
Cood
metaL inDeX anD gLObaL eQUities, Fiveyear perFOrmanCe
Historically, metal and global equity prices
have correlated airly well, which is logical
since the same actors largely drive the two
trends over time. This pattern was disrupted in, when equities perormed well while me-
tal prices (London Metals Index) ailed to make
similar gains. The main explanation or this
was anxiety about Chinas growth. A recurring
theme was whether the country was headed
or a hard or sot landing, which weighed down
Chinese equities and metal prices in . An
accelerating Chinese economy, which is our
orecast, could lead to rising metal prices.
B cmic cdii m icd dmd
Macrocooic aiic ro hia ad h Uid Sa ha iprod, ad h iaio i h ro zoi rd. Th wo acor bor or iw ha h goba cooy wi accra ighy hi yar.
prod cooic codiio, ahogh oy argiay br, hod icra h dad or coodii.
Ddc o Ch oll ch
Th pric rd or a ha b iry dpd o cooic growh i hia i rc yar ic hcory co ha o goba prodcio. Thi iaio cod poiay chag owha ic acopio i Erop o ha bood o ad hr ar ig o cooic rcory i h US.
Low c hould fll fuh, l h lo
Grai pric ha rdd dowward ic hir rog ray a r. Dpi h dci, pric ar io ow ad i or iw hod a rhr, ahogh crr wahr codiio i h US ha h poia odirp hi rd i h hor r.
Sorc: Macrobod
7/29/2019 Investment Outlook 1303: Springtime for equities
35/37
N 2012, BSE METL PES did o oow hir hiorica
par ad ri wih goba oc ar. Worri abo co-
oic growh i hia wighd dow pric, which i ogica
ic h cory co ha h word a prodc-
io. owr, hr wr poii iga o rog growh
ro ha cory oward h d o h yar. Th prchaig
aagr idx (PM) ad ohr idicaor ow ggbrighr i ahad i hia ad ohr y par o h word.
Pric ha o b rraid rai o argia prodc-
io co, ad dad appar o ha abiid i o
ar. Erop ad h US, dad ha b wa ic
h acia crii, ad h pric rd ha dpdd
o growh i hia. hr i poia or chag; i
Erop h dcraio i a copio o b a
a d, ad i h US hr ar ig o a raiy ab r-
cory. or iw, ba a ar h coodiy grop wih
h gra poia or riig pric i .
auoo du lf cou l
r a wa ha h hird rod o h Fdrar oary i progra (QE) i h US ad
p a by a br o ohr cra ba wod i god
pric abo hir oia rcord, b ha did o ariai.
God ha b radig a arod i arag pric or abo
h pa yar ad a ha. Mar payr ar or ocd o
a goba rcory ha o h ri o a p, which hod
p god pric i chc. W xpc ighy owr god pric
drig h yar hr i a harp ri i iaio xpca-
io, which w o ig o. goba growh wr o how
rpriig rgh whi iaio rai ow, ha cod ad
o a -o i god, ic ior wod oo or rr po-
ia whr. Th propc ar brighr or pai ad
paadi. bo pr c o prodcio o h prcio
a i d i h aooi idry, or caayic co-
rr. Paadi i d i pro gi, o h pric rd
dpd argy o cooic growh i hia ad h US,
whi pai i d i di gi, which ar or co-
o i Erop. oghy pr c o pai i prodcd
i Soh rica, whr ajor ppy dirpio ha hi pro-
dcio i h wa o io ri. Paadi ad pai
i ha ao cod d o poor proabiiy.
a d Us could h h fll c dGrai pric ha coid o a ic hir rog ray a
r, copy i i wih or prdicio. Thr ar
o xpcaio o xr wahr codiio cad by
h i o La Nia or E Nio, o w aicipa owr pric
i . owr, hr i h ri o a pric corrcio i h
hor r, d o ay dry wahr codiio i h US.
Thr i ao i ici o ow i o rai a bor h
paig priod or aiz (cor) ad oya ba g dr
way i March.
Low dd off ducd ulFro cobr o Dcbr a yar, h Sadi ahd oi
prodcio by , barr pr day o o h drop i
dad. Tha rai hop o a rhr prodcio c ow
ha o . iio wr barr pr day ar dd o a
aoa bai o baac h ar drig h r ha o
h yar. Pric wi probaby b rraid i h hor r by
h ri o Sadi rabia o cig prodcio a a dirab
ra ad by icrad prodcio i h US, dri by ha oi.
Mawhi, ar payr ar icraigy opiiic abo a
goba cooic rcory, which i rcd i oc ar
prorac i a ad ary b o i oi pric.
or iw, oi pric wi i b arod oday o yar
ro ow, wih a pid ri i iabiiy ii i h
Midd Ea, pciay i ra.
Investment OutlOOk - mARCH
oodii
ASSeT clASS weIghT* reASOnIng
ey W bi oi pric wi b radig a crr a yar ro ow. Thri o aoay rad dowid ri i h hor r Sadirabia c prodcio a a dirab ra.
Istia mtas or iw, hi cagory o coodii ha h gra poia o radhighr a yar ro ow. Nic i h a crry radig rh bowargia prodcio co, which ii h dowid ri, b or oooor coppr, aii ad zic i ao poii.
pios mtas W xpc owr god pric iaio xpcaio ri apprciaby.owr, paadi ad pai ha pid poia, ic abo prc o prodcio go o h aooi idry.
Ait W bi coid pric dci ar o iy. owr, hr i ahor-r ri o a corrcio a a r o ay dry wahr i hUS, which cod dirp h paig o aiz ad oya ba.
* 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 dier rom our long-term strategic outlook or the asset class.
7/29/2019 Investment Outlook 1303: Springtime for equities
36/37
6 Investment OutlOOk - mARCH
Cuc
cis as a oomi oiy ao
abenOmiCs Has CaUseD tHe yen tO LOse strengtH
The yen has long been considered one
o the most overvalued OECD curren-
cies, hampering Japanese exporters
and contributing to defation a
general decline in prices. However, thenew Shinzo Abe governments meas-
ures to jump-start the economy with
aggressive monetary and scal stimulus
Abenomics has caused the yen to
weaken. The aim is to boost Japanese
growth and shit rom defation to
infation. In line with this, we expect
a urther drop in the yen, including
against the US dollar.
auo fo l cuc w
Th prcdd accoodai oary poicy i h ED cori, cobid i Japa ca wih awa-y poicy, a rogr crrci, xpor o ad acia ibaac i rgig ar (EM).Th cori ha rpodd wih rba irio b ao agib acio.
ac ow w l d clc cuc
Diiihig acia ri i h ro zo ad US a w a growig ri appi ha brogh a igh cooigo ir i arai rr crrci i h SEK, NK, UD, NZD ad D, whra h EU ha aracdo