investment outlook 1303: springtime for equities

7/29/2019 Investment Outlook 1303: Springtime for equities

1/37

IvstmtOtoo Ma Spigim f quiiprivate banking investment strategy


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3/37

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


4/37

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


5/37

Iduci


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


6/37


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


7/37

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


8/37


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.


9/37


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


10/37


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


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


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


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


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


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


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


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



15/37

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


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


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?



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?


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


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



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


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


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


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.


21/37

Nordic qii


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


22/37

A oo ya iy i oba sto mats

Glbl quii


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


23/37

Goba qii


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.


24/37

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.


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


25/37

Goba qii


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


26/37

6

Fxd co


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


27/37

7

Fixd ico


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.


28/37

dg fud


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


29/37


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.


30/37


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


31/37

a a


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


32/37

p qu


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


33/37


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.


34/37


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


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.


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.


36/37


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

investment outlook 1303: springtime for equities

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