seb report: corporate bonds emerge as safer investment choice

8/3/2019 SEB report: Corporate bonds emerge as safer investment choice

1/37

InvestmentOutlook December piv bkig - ivm gy

ll ch u


2/37

3Investment OutlOOk - december

Contents

Sagy

oio..........................................................................................................................5

Say ...............................................................................................................................6Mao ay ...................................................................................................................8

Pooio oay: Mo Poga.............................. ............ 10

Th: A goa ah o .............................. ................................ .................. 13

Th: Fiig go ha o gi ............................... ................................. ....... 16

Th: Mao io h y o ............................... ............................. 19

CL

Eqii................. ................................ ................................ ................................ .............. 22

Fix io ............................ ................................. ................................ ........................ 26

Hg ............................. ................................ ................................ ......................... 28

Ra a ................................ ................................ ................................ ......................... 30

Pia qiy ................................ ................................ ................................ .................... 32

Cooii ........................... ................................ ................................. ......................... 3

Ci ................................ ................................ ................................ .......................... 36


3/37

4 Investment OutlOOk - december

Thi o po y SEB oai ga aig ioaio ao i i po. Ahogh h o i a o o jg o

ia, SEB wi o ia o ay oiio o iaai, o o ay o whao whih ai o ia o i. i ah i

o, yo ho i poi a h po a h io oai wihi i, o a h io aig o pi opai o o www..

/iai. oaio aig o ax ay o oa a ay o yo iiia ia. Sagy a a oio

aio opai oioy a appi o x pioiiy o i i oaio. Dio o pio oaio hioy ay

oai po q. Aay poy y SEB ay ho poiio i qii o qiy-a i o opai o whih hy poi a o-

aio. Mo ioaio ao SEB i oaio a i aag o oi o i . a o a hp://www../

ppyiga. (i Swih). Hioi o a oh aia i a o gaa o . Th a o yo i o oh

aia i ay ih i o a, a i i o ai ha yo wi g a yo i apia. o a, o a x h iiia ao

i. Wh ih o yo i i ii oia i a oig y, hag i xhag a a i pa h . Yo ao a

y poi o yo i iio a yo ho away oai ai ioaio o aig h. Fo o ioaio pa i

aia h ipi pop o a ioaio oh o a o po, aaia a www... ay yo ho

ai aio o yo iiia ia o yo SEB aio.

i u x: A a o o o aioa Pia Baig of i Lxog, Sigapo a Swiza yo a oig o p i-o o h ax appia i h oi o yo iizhip, i o oii wih p o a ao a aia aaio. SEB o

o poi ay ax poig o oig oi aig ha yo yo poi o ahoii wih ioaio a a wh qi.

pGoa Ha o Sagy

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L gu Goa Ha o Mao Sagy

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[email protected]

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[email protected]

Cl bwGoa Ha o Aioy Ta

+ 4

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[email protected]

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Thi po wa pih o No , .

o a a o ioaio a aayi aaia o No , .

Sagy


4/37


We live in a changeable world, where previoustruths and natural associations no longer apply.

There is little predictability and investors are very

concerned, which has created a need or resh

strategic thinking in the investment eld. These

and many other questions are discussed in this

issue o Investment Outlook.

W a iig i a i. Th wo i pay o o joi.

Naa apio h a h ay o go o

o og appy o h a x a o. Appay i

o a i i o ow opoa o i y o-

pai wih a a ha go o i y

oi wih wa ax a a iig xpi.

N o ha a pio o aia oi a -

oy pi a oay. W go a o h oi

ii o ayhig ha a ga a qia.

pha i h o, pa o -ioig.

Ba w a aiy, aig i iio

o popo a a piig o i a aiy

pi. o a hi a o p ipiig, i i-

o a h gy, iaio o pai o aiai

i wh a a jpig p a ow i a o oappa ao. Th ip i o h oi i ha oppoi-

i a ao ig o i oay oai a. o o

h ai i hi i o Investment Outlooki

h paia oppoii.

Aoh h ai poi o ai io ao

how o i p o i agy i a way

i oay a i. Wha de acto o a oig h

a? Ba o oaiiy i h pa a, iay

a who gaio o io (who ga hi a i

h ) ha a a goo o qiy i-

.

Wha i aoyig ao pha i h o w a ow i ih o-aia aog a; hy a a ig p o-

gh. o oa pio o ga a piai-

iy, h a igg i w how aio a

po, a aaio o o o i. h p

iaio, o aag agy i a ix o yig o

iii h aag o wa a a iiyig

wh w poia, pi high oaiiy.

o h a oppoii i hi wo, oo, o

i ho o aj. Yay i wa

ipoa o zo i o pa a ogh; oay i i agy

a a o gaig wih goo i oo. a

h ai, w xai o aai i a-

gi a p ga phai o h aia a ii

a . Thi i a g way o iig a

wi poay ai i h poigh a og a xy ow

i a a yi pai, a hy wi o o o a og

i o o.

i ao ipoa o ai ha a w pha wi o a

h o w a goig hogh. A o poi, Eop wi

ha i h igh iio, ih ia a o ai

Eopa Ca Ba a/o o o aag-

poii. Fo a io apoi, h po

o o aay o o. f ha h pahowa a oio i i. Th a ao ha a w

ii oay: h ooi pi i Aia poi hop o

g oay poii, a Aia ooi gowh

i aay giig o poi pi pi. Thi ay o

o poay, i i i a igh po. aaio

, h a aio oppoii. o ia,

h i oo o high aaio. Uiay, ooi

gowh i i h way o o oay po. Poiia

a ow hi, a ha aiaio wi hopy a hi

aio i a poii iio.

Hans PetersonCIO Private Banking

and Global Head o Investment Strategy

iduc

When the fnancial world is out o joint


5/37


Say

exctatios*nxt 12 moths

rasoig *Fc h b u vw d d u cc wh c tu isk

equitis 10% 18%

Neutraloutlook in the short term, POSITIVE in the long term. Globally no strained valuations, provided that

growth does not all urther. A decent macro scenario in the US, signicantly weaker in Europe. Emerging market

(EM) economies will show continued robust growth ater a period o infation-ghting. Strong perormance in

Russia, encouraging news headlines rom China. Condence in the EM sphere seems to be returning, thoughsomewhat cautiously.

Fixd icom 6% 7%

Negative towards government bonds in the OECD countries because o todays very low yields and prospects osome yield increases/risk o price declines.POSITIVE towards High Yield bonds, which based on undamentals

in terms o company health and bankruptcy risk have unjustiably wide yield gaps to government securities.

Given somewhat better risk appetite, EM Debt will also appeal to investors, due to the potential or lower yields/

price increases and stronger currencies compared to the developed market (DM) sphere.

Hdg fuds % 5%

positive.Still cautious about Equity L/S and Distressed strategies, but the actions o central banks will create

attractive opportunities or Credit L/S managers. From a portolio standpoint, we view Macro and Trading strate-gies as good diversication mandates.

ral stat 3% %

Neutral.Comparatively stable market perormance. World economic uncertainty and volatile oreignexchange markets are contributing to delays in major real estate transactions. Continued heavy demand

or less risky quality properties.

pivatquity 15% 27%

Neutral.Market turmoil has continued to depress share prices o PE companies; this has resulted in large

discounts to NAV. The market has already priced in continued problems. Fundamentals provide good support

or todays prices.

Commoditis 3% 12%

Neutral.The weak outlook or the OECD countries is hampering good perormance. At present, upturns

in the commodities market are more indicative o greater risk appetite than o an improved growthoutlook. Limited downside or base metals. Gold prices will benet rom the prevailing environment.

Diminishing worries about weather developments will lead to alling prices or agricultural commodities.

Cucis 4 3% %

Neutral. In undamental terms, EM currencies will benet rom interest rate dierentials and continued highgrowth, but greater risk appetite will be needed or appreciation. The USD will strengthen in a bumpy market

that will also be sceptical to the EUR. The yen is regarded as overvalued.

1The orecast reers to the global stock market. 2 The orecast reers to a basket o Investment Grade and High Yield.3 The orecast reers to a basket in which the energy, industrial metals, precious metal and agricultural commodity categories are equally weighted.4 This opinion reers to the alpha-generating capacity o a oreign exchange trading manager.

XpCD ik D U (X mO)

iOiCL ik D U

(Ovmb , O OCOb , )

Cg i OU XpCD U

Equities

Fixed income *

Hedge funds

Real estate

Private equity

Currencies

Commodities

0%

2%

4%

6%

8%

10%

12%

14%

16%

0% 5% 10% 15% 20% 25% 30%

Expected volatility

Expected

return

Hioia a a a o h oowig ii: Eqii = MSC AC Wo EUR. Fix io = JP Moga Goa GB EUR Hg. Hg = HFRX Goa Hg F

USD. Ra a = SEB PB Ra Ea EUR. Pia qiy = LPX EUR. Cooii = DJ UBS Cooii TR EUR. Ci = BaayHg Cy Ta USD.

-5%

0%

5%

10%

15%

20%

25%

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

Equities Fixed income* Hedge funds Real estate

Private equity Currencies Commodities

Fixed Income

Equities

Private equity

Commodities

Real estate

Hedge funds

Currencies

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

0% 5% 10% 15% 20% 25% 30%Historical volatility

Historicalreturn

iOiCL COLiO (-- O --)

Equities

Fixedincome

Hedgefunds

Realestate

Privateequity

Commodities

Currencies

Equities 1.00

Fixed income -0.50 1.00

Hedge unds 0.5 -0.30 1.00

Real estate -0.12 0.06 -0.05 1.00

Private equity 0.85 -0.38 0.66 -0.1 1.00

Commodities 0.25 -0.1 0.68 -0.05 0.38 1.00

Currencies -0.19 0.19 0.1 -0.09 -0.0 0.02 1.00


6/37


Say

Wig i mOD pOCiO

Wig i mOD gOW

Wig i mOD ggiv

OLLig -mO COLiO v. mCi WOLD

(U)

-80

-60

-40

-20

0

20

40

60

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Equities Fixed income Hedge Real estate

Private equity Commodities Currencies

pFOmC OF DiFF CL iC

R i i i o .Hioia a a a o h oowig ii: Eqii = MSC AC Wo EUR. Fix io = JP Moga Goa

GB EUR Hg. Hg = HFRX Goa Hg F USD. Ra a = SEB PB Ra Ea EUR. Pia qiy =

LPX EUR. Cooii = DJ UBS Cooii TR EUR. Ci = BaayHg Cy Ta USD.

So:SEB

-0.8

-0.6

-0.4

-0.2

0

0.2

0.4

0.6

0.8

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

Fixed income Hedge Real estate

Private equity Commodities Currencies

6%

0%

7.5%

0%

0%

20%

30.5%

36%

0% 10% 20% 30% 40%

Cash

Currencies

Commodities

Private equity

Real estate

Hedge funds

Fixed income

Equities

Previous Current

1.5%

2%

0%

0%

0%

17%

79.5%

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

10.5%

4%

4.5%

0%

0%

30%

34%

17%

0% 10% 20% 30% 40%

Cash

Currencies

Commodities

Private equity

Real estate

Hedge funds

Fixed income

Equities

Previous Current


7/37

8

mc u

Worse outlook or the world economy in 2012

Euro zone in recession, but US will cope better

EM sphere will keep growing much aster than

OECD countries

oh, h wo ooi ooo ha o

gooi. Th oig ii i Eop ha aa,

paig oh aia a ooi aiy. Thi

ha piaiy i a ioaig oo aog

hoho a i i ay pa o h wo,

ha ao ii i ai ha aoooi a-

ii, o xap o ooig a iia poio.

Th ag gai hag opa o a w oh ago i

ha h o zo wi poay p i a io i ,whi h US ooy ha po ha xp.

Th i w h ECD oi a h g-

ig a (EM) ph i o gowh yai wi ai

iza, ahogh h EM oi wi ao a y

gai ooi o a h o o o.

Goa ooi gowh x ya wi w ow .

La i , h ooi iaio i h ECD oi

ay ipo owha. By h, poiia a ho ha

a ha o oig oig po. Low

iaio wi a a a i ay ECD oio oi hi zo i a poii o a x

pio. Majo iiai oi wi poay ao ah

o oay qaiai aig.

Dcl u c h U

Th US ooy ha po ha xp i

oh, ha o hoho aig, hap

gy a og aaig aiiy ow ha i-

i o Japa iia goo a agai oa a

ipio a y h aa ia o a pig. A

ai, w i GDP gowh wi a i h ha

o wiho iig io io. Aog o o o-

a igh aia oiio, qio a ao wha

wi happ o a a poiy, h o zo io

a gooy i aog Aia. Upoy wi

p pwa x ya, a iaio wi ow. W o

GDP gowh o ay p hi ya, ao . p i

a ha . p i .

u z c

Th gowh ooo i h o zo ha y -

aiay wo. Th oig ii a aia a

oi ha ii, h aiy poga a

o ah i ay oi, a ao iiao

pi oiay ow gowh. E i Gay whih

i h ow o a og i h aio wi

o o appa. W i ha a h GPS oi

(G, a, ay, Poga a Spai) xp a wi

p i io x ya, whi h Ga ooy wi

gow y owy. No og- oio o h oig

ii i ii. Mawhi iaio wi a ow ha

i ya. W xp o zo GDP o gow y a i

ao . p hi ya, h a ay . p x

ya a gow y ha p i .

D c hu h bh c

Th o zo ii i hig h Ui Kigo ia ow

xpo a a o hoho a i o-

. Riig poy, g aiy a a high

iaio a o ha p i Sp i ao

hapig Biih pia opio, whih wi a

hi ya a aga i . Nx ya, how, iaio

wi a py, whih i i poi owa h qaia-

i aig y h Ba o Ega. W xp h UK o aoia io, wih GDP gowh i h p ag oh hi

ya a i , a a i ow p i .

dc ddc u wll l w wh

Th Noi oi oi o how oiay

ooi aa g aa, pi o

a ao aa ha ay oh -

gio. Thy a h aag aiy w i , hogh

wo ooi gowh wi a a a o

Eopa ooi wi p i io. Si h Noi

oi ha xi a wih h o zo, how,

hi gowh wi oiay ow x ya. W oaha oa Noi GDP wi ia y . p hi ya,

ha . p i a p i .

Global growth slowdown but no recession

Investment OutlOOk - december


8/37

9

J cuc c

Th Japa ooy wi a y h goa ow-

ow, i h ho , oio oowig h a-

a ia wi ai ooi aiiy. Th wi py

o i poio o, o aio (a ga i i

pi) wi pi. Ba o hi a a iay og

y, h Ba o Japa i iy o oi ig y

i h oig xhag a. A p o GDP, h

oy pi o i y a h ag i h ECD,

ha o a ag p o pia aig hi wi o

a o high i a. w xp Japa GDP o

i y ha . p , whi pi gowh i

p i a a i ao p i .

ld d lw l

Aia gig oi a oiig o hp ai hgoa ooy, ahogh hi gowh wi oo a i o

x ya. Th o zo ii a ow US ooi gowh

wi ow xpo o Aia, hi wi a y

h iaigy ipoa o o ia-gioa a. p

ooi i Maayia wi a o ha ooi

wh h oi a pay a ag o i gowh, i

oia. aio ha ia i o Aia oi,

a ow iaio ig wi ia hoho o-

pio a gi a a oo o ow y a.

Th Chi ooy i ow owig o wa xpo

xpaio, whi high gowh i oi a wi pi.

Faig pi o oo a oh ooii ogh wih

o a ooi gowh wi a o ow iaio

aha. W i ha Chia GDP wi gow y ighy o

ha p hi ya a y o p aay i

a .

Expo ao o a ah a pag o ia GDP,

o ha oy ha goo poia o hg o a wa go-

a ooy. So a, iaio ha oy high ow

ao . p o oa i ha i wi a

ig . W pi GDP gowh o ao . p

oh i a a . p i .

L c wll l cld ll wd

Dpi ga pog ig h pa a i o

oi gowh oiio, Lai Aia ooi a

i y ii o hiig goa ooi wi. Th ow-

ow i h ECD oi wi h ha a a ipa. W

o GDP gowh o ay 4. p i h gio hi

ya, ao . p i a oy a i high i .

Thi ya iaio i Lai Aia ay appoah p

a h ow o ao p i . Togh wih a

ooi ooig, hi a h o oay igh-

ig wi iiih.

l lwdw u

h pa ya, gowig oi a i Ea (i-

ig Ca) Eop ha g aogi xpo a a o-

oi gi, h gio xpaio i ao o wa

a ow gowh i goa a hap i xpo. Highy

xpo-p Hgay, h Czh Rpi a Soaia(wih xpo qia o - p o GDP) a p-

iay a. To o x, gowh wi ao a

o ow apia pig y i, h a-

io i GDP gowh wi a g ha i h o zo.

Exp o Hgay, pi o i oa. A a -

, h o aiy a wi a ha i

W Eop, a hi wi oi a.

Poa, Laia a Uai wi oi hi o-

a g ighig, whi a poiy wi o ighy

iai i Ria, Eoia a Lihaia. Copio

a apia pig a h ho p aiy w a x-po gowh ow. aio wi ai ow i o Ea

Eopa oi, aiy o ag op gap.

lw c wld wh

W oa goa GDP gowh (aj o phaig

pow paii) o 4 p hi ya, j o p i

a ha 4 p i . h x op o

ya, h gowh a wi h ai ow (gowh

ha aag . p i ), h wo ooy

wi o p i a w io. Expaio i h EM ph

wi ai y a h a wih GDP iaig y o

ha p hi ya, a i ao p i a

j o . p i . Th opoig oa

g o h ECD oi a oy ighy ao . p

, j o p a ha p .

Mao ay


China, GDP volume growth India, GDP volume growthSource: Reuters EcoWin

Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1

2005 2006 2007 2008 2009 2010 2011

Year-on-yea

rpercentagechange

0

1

2

3

4

5

6

7

8

9

10

11

12

13

14

OF LDig FO mJO i m COOmi

GDP growth has trended lower in both China and India

since early 2010, but so ar this deceleration is moderate.

The growth rate remains above 9 per cent in China and 7.5per cent in India. Although the risks o a harder landing in

2012 have increased, mainly due to European economic and

sovereign debt problems, our main scenario is still that botheconomies will experience a sot landing next year and then

accelerate somewhat in 2013.


9/37


mOD pOCiO

G ha ai a h o h o zo aa,

i gaay gig o opiio o aio o

ay. A a o oi poiia ph aia

oig o yi ao p , whih wa h

a whih a a oh oi w o o appy

o ai-o oa o h Eopa Uio (EU) a h

aioa Moay F (MF). US -ya Tai o a o-ow . p i Sp wh h o

zo ooo wa a i gooi. Si h, Tay yi

ha o a a hi wiig hy a ao p .

Ga -ya o, whih w aig a j ow .

p , a o agai ao . p a ig ha o

a pay a o woi ao h gowh ooo i

Eop ha i h Ui Sa.

Mo Poio, w y o p apia y aoaig

i o a a a aag ha a ga

ga o ooi . Ma woi a ay

ag, how, a gi a owha aig ia a-

hi p p o a a a, iy o.

Si Sp w ha oy a io aj.

h x io -pooio, w ha aj h ha o

ao x io owwa o 4. p

o .. W ha o aio poiio i High Yi

a gig a (EM) oh.

h hg i, w o ha i a-oi-

aag ha goo poia o ga , oh

a aio a a a ow oig o o-

ioa ho a a oa piig i oi o oa

ii igh ow. W ha h aoa p o CiLog/Sho y paig o o o Goa Mao aag

a y aig h po o o -wighig i h x

io -pooio.

h i -pooio, w ha pioy aoa

apia o aag wih i aa i h o-

ig xhag a, hy ha o i g-

aig aiaoy i h pa w qa. Thi i why,

oi wih o iw o i, w a ow hooig oa a o ai i appoah y ig xpo

o Aia i. La i o w pa o y

aag i ao o a Aia x io ha i

i ho aii (- ya) a i oa i (o gai

y xpo a ii i a i). Thi poiio i

gay o ii o i appi i h a, how-

, a w ha h h y a a o

p o h ai 4 p .

A a o yioa a, Mo Poio ha

ao o o go i Ag-Sp, h po-

oio ho a o o a a api pa a i appi

a iqiiy ipo.

Setting our sights on growth

Major market worries and a dose o systemic risk are pointing towards continued turbulent markets.

In our portolios we will generally maintain our cautious approach to risks, but we are choosing

selective growth-oriented exposures. In Modern Protection this implies only minor adjustments, but

in Modern Growth and Modern Aggressive it will mean a larger role or equities, including exposure

to Asia and the Nordic countries.

17%

2%1.5%

79.5%

Cash

Currencies

Hedge funds

Fixed income

plc:

md ip


10/37


mOD gOW

Th o zo i ha h ai ooig

i aia a hogho iig hi qa.

Ahogh o a a agy a h a a hi

wiig a hy w i a Ag, i ha a aai i

i oh. Mawhi h i ap ha aw

o o x.

Ahogh h VX oaiiy ix, ao a h a ix,

ha oy ai ao h a, h ix ha

i a owwa i h o Ag. Th US

oa, whih i aoh iiao o a oaiiy, o

o ha p agai EM i i Sp,

ha a owha i h, hogh i ha aig

aiy i i-o. Aia i ha po

w, how, wih a o i o ao p iAg.

Mo Gowh w ha ha a i ai i

Ag, wih qiy hoig o p a ah ho-

ig o o ha p , oia y ga aiy

a h a o iiiiy i . Ahogh h a i ay

o aiy, h ga oo ao h

o Eop i o pa ha o qa ago. A ao

a, a o a ha a o ay aai .

Fowa-ooig pi/aig (P/E) aio o qii a

h goa a aoa, a h pa w High

Yi o a go ii i agai ao

ai poi.

h paiig ia, w p o i i a a

ha a ga ga o a ia. Mo

oa pi ha a p a o opay

api x ya, whi h o a i piig i

o ha p . Copoa aa h a hioi-

ay og, how, a High Yi o oo ay -

a. Egig a o oi o aai wih

hi high opo, a i o EM oi hi i ao po-

ia o aig yi (= pi gai). A h og app-

iaio i h oa, h i ao ga poia o xhag

a gai. W ha h gaay ia o x iohoig o . o 4 p o h oa pooio, i-

ig 4. p High Yi a p EM .

h qii -pooio, w ha iy ogh x-

po o a wih h poia o gowh Aia

(4. p ) a h Noi oi ( p ). Ahogh

h gio o o oai ha goa qii,

hy ha how oh goo haaii opa o EM

oi gay. Ahogh i appi wi i h

poa o h a i h ho , hi po-

ia iw o - ya i og, poi w o o

p i a goa io. Toa xpo o qii i MoGowh i ha p , whih a ga a a

oi i poiio.

To ipo h aiiy o h pooio o wah hap ow-

i h a, w ha ia h ha o CTA

hg o p . W ao o ha i a-

oi aag ha goo poia o ga ,

oh a a o a a a ow oig o

oioa ho a a oa piig i oi

o oa ii igh ow. W a ao iaig o aoa-

io o Ci Log/Sho y paig o o o Goa Mao

aag. a, w ha ia h hg -po-

oio o p o Mo Gowh o p ai.

h i -pooio, w ha pioy aoa

apia o aag wih i aa i h o-

ig xhag a, hy ha o i g-

aig aiaoy i h pa w qa. Thi i why,

oi wih o iw o i, w a ow hooig oa a o ai i appoah y ig xpo

o Aia i. La i o w pa o y

aag i ao o a Aia x io ha i

i ho aii (- ya) a i oa i (o gai

y xpo a ii i a i).

h who, o poiio a o o p o o

a poa (a h goa gowh) h pooio

ho a o ga a og a w o o

p i a goa io. Sho- poa i, how,

iy o a i po o h o o poiia a

a h a ow o i appi. Fh aha, w -

h xp aiy a pooio poa.

Pooio oay: Mo Poga

10.5%

34%

17%

4%4.5%

30%

Cash

Currencies

Commodities

Hedge funds

Fixed income

Equities


11/37


Pooio oay: Mo Poga

mOD ggiv

A hi ig ow i Ag, qii oi o a

ig Sp. Sha pi o owy i o,

how, ai hop ha o zo a w oigowa ig a i oio o h o ii. La i

o, hy ay i a pa ha wa poii o h

a, a ai. Th pa o ga a

o o a oo aaio o wi a a poiia oaap

ha a a pa o a oio. Ri appi a h h

poa o aio o a a a a

hag aiy i po o poiia a. oay

a iaio, a pi a aiy ig i y h

poiia aa a a oig i Eop.

Si Ag, o ooi ha i hi goa

gowh oa o owwa. Mawhi opoaaig xpaio o ha ow. Th

iio ha ag i h EM ph (ao p

i h o Jy opa o . p o W

oi). Expaio o Aia opai ha

ow y ao p . Mawhi, US aoooi

iiao ha poi pi pi, a Chia i ap-

pay oig owa a ooi o aig. Ta

ogh, hi i a aio ha poi o oi goa

gowh x ya.

Mo Aggi, a i Mo Gowh, i a Ag w

ha a i ai wih qiy hoig o p

a ah hoig o o ha p , oia y

ga aiy a h a o iiiiy i . Ahogh

h a i ay o aiy, h ga oo

ao h o Eop i o pa ha o qa

ago. A ao a, a o a ha a o ay

aai . Fowa-ooig pi/aig (P/E) aio

o qii a h goa a aoa, a h pa

w High Yi o a go ii i agai

ao ai poi.

A h a ga o aii, w gaay ga o

ia o xpo o a wih h poia o

gowh Aia (. p ) a h Noi oi ( p). Ahogh h gio o o oai ha

goa qii, hy ha gay how oh goo ha-

aii opa o EM oi gay. Ahogh i

appi wi i h poa o h a i

h ho , hi poia iw o - ya i og,

poi w o o p i a goa io. Toa xpo-

o qii i Mo Aggi i p .

High Yi o a p ao wo hi o h x i-

o -pooio, whih ao o p o Mo

Aggi. Mo oa pi ha a p

a o opay api x ya, whi h o a-

i piig i - p . Copoa aa h a

hioiay og, how, a High Yi o oo ay

a. Th aiig o hi o h -pooio

oi o gig a o, whih oi o a-

ai wih hi high opo, a i o EM oi

hi i ao poia o aig yi (= pi gai). A hog appiaio i h oa, h i ao ga poia

o xhag a gai. W a aiaiig o x io

poiio.

To ipo h aiiy o h pooio o wah hap ow-

i h a, w ha ia h ha o CTA

hg o p . hi hg agy,

ay igiay o o aag o aoh, a w ha

h ho o pp o xiig CTA pooio wih

aoh aag who a fiy high i o io

Mo Aggi i po, who i ha a goo a

o a i oo.

Goa i a h oaiiy o h aia y i Eop

a oiig o hap highy-ag i o,

piay pia qiy. Ahogh io o a a

a agai a high , w a hooig o ai o h

ii o gay high i i y aiy ao

h aa h a ig aiiy o a a h iqi-

iy iaio i h a.

Aogh, h Mo Aggi pooio i agai xpo

o a i, o iy ag o gio ha

a xp o i goa gowh i h . R ow

a, how, i pa ao x io, hg

a ooii o a poa.

7.5%

6%

36%

30.5%

20%

Cash

Commodities

Hedge funds

Fixed income

Equities


12/37

13

h

Reduced cyclicality due to debt reduction

needs

Greater ocus on selectiveness and direct

returns on assets

Bond markets are changing investment

conditions

Th goa ii gi ao o po how i-

agi ho oo i h . o h h

ha ay o a aiy o h x w ya i ha o-

oi pa wi oo a i i ha w ha

ao o ig h pa h a. Liy

o h oi o h i go a

pia aa h a oi high aig , a

wiig o a opio wih oa a poay

owha yiaiy.

W a ai h pa ya i o h pha:

Until2000debtbuild-upandcapitalmarketappreciation.

2000to2006continueddebtbuild-up,butchangesin

aaio = ga oaiiy.

2008(autumn)debtreductionandlowermarketvalua-

io.

Toay w a oig hogh a pha o io, wihoi y ag iaa ha a h a. Th

oaiiy ha w ha oigia o hag i a-

aio, iqiiy a io. Thi oaiiy ha ao

a ay pop o o i o h o a a

a i. W a o o way owa h g o

a gaio o io who o o iw o a a a

o o .

W ha i i a wo wh pow y ha i

o a p a ow. Moay poiy a oh a-

o ha a gi o h ooi y. Low i-

a ha oag oa aig a opio,aig o o y ha i ha ga

ag o a o. Thi ha a ha h o

ipoa aayia paa ha o iiy h -

ig poi o y; o hi ha o, h io

oiy ha o yiay. Mao-i a

aayi wa h ip o . Aoh ao ha hai ig h pa h a i ha o

yi ha aiay a hogho h pio. Thi ha

poay i oh h ooy a a i a poii

iio. Ba yi ha o ow a ow, hi

ha i apia io i (hap o oow) a i

a (ah o high ).

h , h i ia wi i.

a a xy ow. Moay poiy i o a -

i. Si hai ia ow i a o o

ha h a ipa. So a wi poay o ha

h a pia yiaiy o wo i. Thi a ha wwi o h o i i o i

agi.

Rio i i h ECD oi wi pa o yay

i aha, i a wi o a pow a pioy,

aig wi wa h ipa o opio, poy

wi a high a w wi ha owha o oig

ooi poa. o fi o ay y

qii a h wa goo gowh. Gi h

, w o igiay o i i iiyig

h gi gowh h ha i xi a ha ga

a. Thi a ha o qio i iiyig

yia hi wi ipoa o a pay.

Lw d ld wll ch h

Haig o yi a ow a oay wi hag ay hig.

Bo ha a ip, a gao o , wih

aig yi a a xa iig o. pooio, h a-

gy o ig o a a i ha opaaiy

ip. Bo ha oi goo , whi ha

ha poi gowh. Looig aha, hi wi hag. Gi

oay ow yi, o o hoig wi o a

goo. Sagaig yi wi pay - p . Riig yi,

whih wi aiai oo o a, wi poi a gai

. Thi ao a ha h ah o a o o wi o iaigy ipoa. Th ho p-

ay ha ow oaiiy i hi yig a, o a a

o ha a oa.

A global search or returns



13/37

14

i u hd

Toay w ha a i ia wh aiioa y-

iay i gowh wi o h a ai o o

. Voaiiy i high, a a a h pi o ha i. Ba o h oiio, w ah h oio

ha w gi -high pioiy o h aiiy o aio

a o de acto ga . By hi, w a

i h o o ii, opo a p ah ow.

Gi a ag ah ow a goo ii, w a i p

apia a ao i wih a g o a aio.

Mo i po a ig o a wih h ha-

g o iiyig ig poi i y a aig

how a y wi a h a o a. Gi h iz o

i ooy a h ag qaiy o aa ha i ga,

h Ui Sa ha aay i h poigh. wp o gy io gaig ha io apig

y, h o wi aay hi o h yig a,

ga o gio o whih pa o h y w a i.

h c, w ccu:

. Th -gaig apaiy o a pi a:

ii .

. Th aiiy o hi ii, i yia iiiy .

. Vaio i ao ha ay a a h a o

h a, y i .

4. Ri a i aio o xp (i/wa

aio).

. Ro i h pooio, oaio, iiaio w

o o .

w hll w w u h c?

qu

Eqii wi ai aai a a a a i pooio.Sh ao a h gowh o h yig a, goo

piig (ow aaio), poiiy ia a a o

pay ighy iig pi a ipoa.

B i a ia o a ooi aio, io

wi o o ipoa. Ba w wi iig o a

og pio i a wo ha wi i aig wih ag

po, i wi o o ia o iiy wh a

gowh i. Rgio a ooi o wih goo poia

wi ga . Th i o -

gio wi ao ay a hag. i oia o

ii o a gio io h agoi: Thosewithrapidgrowthindemand,currencieswithgood

poia a iig poiiy.

ThosethatwillbasicallygrowatthepaceofglobalGDP.

Thosewithmajordebtproblemsthatwillaectdemand.

Thi aayi a i oghy h igh iio, i w

wih o oi o gi -a iig, w

y h haaii o h aio qii. W h

opai ha ha goo aa h, a a

a pay a ii p o ooi y.

Th opai ho ao ha a a ii hioy.

A a iaio, w a SEB Eia o a Soho-

i opai o . Th a ow how opai i

whih yia o ii a ga a ii.

Th: A goa ah o


COMPANY Direct return (%)

2011*

Historical return (%) Market

capitalisation

(SEK m)*

2010 2009 2008

l2 . . . . ,7

l .7 . 4.4 4. ,

. . . . ,

Zc . . 4. . ,

cu . . 4. 4. ,7

& muz . 4. 4. . ,

C . . . . ,

l . . . 4. ,

ig D pObbL DiC U

First, we made a list o companies on the OMX

Stockholm exchange with positive recommenda-

tions plus high, resilient dividend levels. Next, we

added the criterion o a 3.9 per cent minimum

expected dividend. We eliminated companies that

have cancelled dividends within the past three

years. Finally, we kept only companies with a mar-

ket capitalisation above SEK 10 billion.

* Market capitalisations on November 18, 2011.

Source: SEB Enskilda


14/37

15

aoh aig, w oo a opai ha ha g-

a a i o a a p aay o h

pa a ( h ha ow). Th ha ao how h

a a o h opai a iia ha h hapi o hi yp o opay o ha h o a-

a a who, o o h iia w piy o a goo -

a i.

bd

Bo a h ai -a i, go-

o ha o h o hi aai a yi

ha a. Nh, opoa o a ha ow

o io h poigh o aio ao.

o h ig hag i Eop oay i ha o a o

a i hi aa h. Thi a ha o-pai wi ia hi oowig iy ia o a.

Th Eopa opoa o a wi o xay i

h Noh Aia o. iw o opoa o

i p i h Fix io io a i Investment

Outlook. H w wi oy o o h a hag ha

wi a opoa o a wohwhi o o i

o ay ya o o. W ha y i qi a

o i opoa o, piay i h High Yi g.

Thi ha gi aa xpi o how hi a a

wo. a i ha opoa o ha goo i

haaii, poi w pai hahy iiaio.

ucud d

W a ig o a o i i whih o

a pa i i a i o o

opay-pi i i h i. Thi wi a o-o o o i i h , wih h aio yp

o haig i iqiii a o o h

qiig og o-i pio. Pig ogh a a o

o i o way o ig i. i a aai i-

i o a. Th pooio ig a a a ha-

i o aig h hoig i o o ia xpo

a h xp o iqiiy. o h ppa o

o i hi apia o a gi pio.

l

Ra a a a x way o oaiig a -

i a pooio, whih ay ao i o iaioopaio. piip, h i away h po o

iqiiy h, a io xp o o i hi apia

o o i. B i xhag, hy gai goo a haa-

ii. Ra a i a a io whih ag iiioa

io p h o hi apia i o o h a

o hi pooio. i ipoa o o ha iia pop-

i gay poi o a ha oia

popi. hag i hi a i ha h

o i ah ii, a ho ha xi a o y

i aiy a.

Th: A goa ah o


COmpi Wi ig DiC U v FLUCUD L mk

0%

3%

5%

8%

10%

13%

15%

18%

20%

Ekornes

Kesko

Sanoma

Fortum

Veidekke

Uponor

Kemira

Castellum

SCA

Holmen

Fabege

Peab

StoraEnso

Wrtsil

NCC

Skanska

UPM

Min Avg Max

Directret

urn(%)

0.28

0.35 0.360.37

0.39

0.460.48 0.48

0.510.53

0.59 0.59 0.60.64 0.65

0.74

0.5

1

0

0.2

0.4

0.6

0.8

1

1.2

Ekornes

Kesko

Sanoma

Fortum

Veidekke

Uponor

Kemira

Castellum

SCA

Holmen

Fabege

Peab

StoraEnso

Wartsila

NCC

Skanska

VINX30Index

Beta

Equallyweighted

portfolio

When we list those companies that have provided yearly direct returns o at least 3 per cent during the past decade (right-hand chart)

we see that virtually all o them have had a beta value below 1, i.e. their share prices have uctuated less than the exchange as a whole.

This is a good example o exactly the combination we want to achieve in return-based investments: stable income ows at low risk.

So: R EoWi, SEB

So: R EoWi, SEB


15/37

16

h

Great uncertainty and sharp price movements

mean good potential or those who dare toleave the herd

Investors seek assets they perceive as sae;

this creates buying opportunities in turn-

around situations

Undeserved price declines create value

pockets with attractive risk/return ratios

giy ai i i h, aiiy i h

ii o h a. Voaiiy pi aio ia

wh h o a o if o a.

Goaiaio ao oi o h aio, i

i ha a a ooi a a o wo o

ighy ogh, o o wo. ya, h

i o/i o ha o a oo way o iig h

haio o aia a pay. o o i h,

ih io o o o a yp o i ha ay aio

i o i. Pi o i a a, pay a i i a-

oa o a i pi o ai io,

oi ao a h ooway g ow wh

yo i yig o xi a h a i. Thi a apia

ow ha a oi o oy a o aa.

Vaaio h o o aai i ay pa. Thihaio ao a goo poia o ho who a o

paa h o h h a go agai h .

H w wi y o o h ao o h oi

xagga pi o a y o iiy i

o whih h i- aio appa xa aai, pi

h ai iaio.

w xl dwu

Th oppoii ha o i h wa o i aio a

iig aiy ha wo ai xpaaio. Fi, ai

yp o a o po i i o aiy

a oh wo, o i i iqiiy how ay ii o a iy, aiiy (aia) a h piaiiy o

aig gowh/ apia ow. H ai pi

ai, whih o o h o i. So,

o a g ay y a y api i; h ay o a, o, a a

o opai. ao ay ha ai h o

o o h i o qiy ow o i, pi a o

h ai o o haaii, wiho aig io ao

ha aa ay ha hag. Aoh ay ha

aayi apaiy i ipy ifi o paa h wha

o h ha. Thi a o h g o wha w a

a po i ha ha y ow

aaio. No h wo y. ay a, a

ow aaio ay ji. A io i a o

iiy h i w wha i a wha

i o.

w o o oo pa i oai i, i i

a ha aog oh hig, io o paia

apia. Thy o hoig i pipha a i ao

o wha hy ga a ho a. Thi o

ag aia a, h a Noh Aia o, i

ag a a xpo o apia aay p a

ag ha o a a ha i a. (Fo xap,

Aia io gay ow a ag pag o h

MX Soho xhag ha Sw ow i US o a-

.) W a i o hi pa o h a ha

h US oa o gh wh oaiiy i a ha

Aia xhag a op po aog h woo a hi ya.

Aoh pa i ha i a oa i

o a hoig, o i ag a a w,

ao i i wih a o a hioy. Coi i

Swiza a a i go a i aoiaio i

h a. Japa ao o , aog wih o a-

ha, gay ow a a opai.

o o a h aaag o h , w o

oy o iiy whih a a h o i ai

i a ha h ha h ga poia o i wh

i appi . W ao hi ao wh i ap-

pi a . Piig ig poi i i away

Finding gold that doesnt glitter



16/37

17

iy. A p, i og- oio o Eop

po appa o h o ipoa aay o h a

peripeteia, a h ig poi i a i a G aa.

Th o way o iiyig oppoii ai h pai-

ig aiy i o aay whih o h a ha ha

a ha o o o aa ao, a oiio

aay ioa, a whih o ha y wp

aog i h pi i. Aog h a, h ga po-

ia ay o.

h xap i Noi qii, piay opa

o qii wh i Eop. i o piig ha o-

Noi Eopa qii ha gay h, oi-

ig h po i pa o h gio. No-Noi Eop

wi ggig o a og i wih h o ag a i, a a ag popoio o i wa poa

i iy ji. A oioy h po o h

oi wi a h o ogy poig ooi

o h Noi oi, j a wa o-Noi Eopa

a wi h xpo o Noi opai. B aig

i i ha h ha o Noi xpo i o gig

a ha aiy ia, a xpo o o-Noi

Eopa opai ha a a a a y, i

i if o aa ao why Noi opai

a a agoy ha a o ha a oa Eopa ix

( ha). Th i o jiaio o agig ha o h

who, Noi o a ha a ag o yi-

a opai ha a iy o o y a y

ia aiy ao gowh. B i i ao poi o

p ha h Noi gio i ig pih a o

h aiy a iz o i o xhag (io a

ig o hoig i a pipha a).

Lag-ha-aag pi i ha ao a o

a i h wo gig ooi, piay i Aia,

hogh h oi o ha h a gowh

a a ooi. Th ip xpaaio o h ai

wa o Aia o a i h oi hioia

a o o iaiiy a oaiiy, oi wih h

a iz o ay o hi o a. Thi ag i

giig o o haa, how. Aoh xpaaio

ay ha i ai i, a o o o wa

o pay xa o gowh, whih ay a oo xpaaio

o a po ha ai a g a a

aiy i i.

gwh d

A Goa Sah y how ha ho Eopa opa-

i ha ha h high xp aig gowh i hx w ya a, i piip, ig a oay wiho

a pi opa o h o h a. Hioiay,

opai ha a xp o how aig gowh o

o ha p o h x h ya (iig h

ya) ha a a a pi o 4- i o-

pa o h o h a i o pi/aig aio.

Wh h a ha a a P/E aio o , h opa-

i ha a a P/E aio o -. Toay h opai

a aig a P/E aio o j o , i i wih h a

aag a o o a hioia ow. Raoa xpaa-

io a ha i appi o ow h a

o (ai) x po a ha h a ha

i o i aay oa. Thi aaio aoay

ay, o o, oai ih wh h ha o h

opai po ha aag o hi aig

oa wo. ay ao ha h piaiiy

o oa i wo ha o a og i (i i ga), o

i o a h aiy wa pi poa o h

Th: Fiig go ha o gi


USA, CBOE, Volatility Index (VIX)Nordic countries, OMX, VINX, 30 IndexEmerging Markets, MSCI, USD IndexUS, Standard & Poors, 500 Composite Index Source: Reuters EcoWin

Dec

2010 2011

Feb Mar Apr May Jun Jul Aug Sep Oct

Percent

15.0

17.5

20.0

22.5

25.0

27.530.0

32.5

35.0

37.5

Index

70

75

80

85

90

95

100

105

110

UCiy U mLL mk mO

Repatriation o capital has beneted the larger American

stock market and created outows rom the smaller stock

exchanges o the Nordic countries and Asia.

Europe, STOXX, Financials, Index, EURNordic Countries, OMX, Financials, Index, EURWorld, MSCI, All Countries Index (LOC) Source: Reuters EcoWin

Dec

2010 2011

Feb Mar Apr May Jun Jul Aug Sep Oct Nov60

70

80

90

100

110

120

Index

60

70

80

90

100

110

120

UOp bk v b LUmpD Og

Companies in the Nordic nancial sector (mainly banks)

have seen their share prices all almost as much as those o

their colleagues elsewhere in Europe despite clearly lower

exposure to crisis-plagued countries and more stable nancial

positions.


17/37

18

Th: Fiig go ha o gi

ha ay ji. B wh a i agoy o po-

ia gowh opai i a a i hi aig wi o

high ha h a i ga, h xpio

a o ha pi i. So xapigh opai wih aa ppo o hi a-

ig oa, h a ag xpo o gig a o

po aiiy i gaig aig.

Th a aoig (o o a ag i) a appi

o h a i Aia. Sa aio i gowh o

xpo p a a high ha o oi

opio, op wih ga aia aiiy, iia

ha a a gop h a igh aig high -

iiiy a h high aaio opa o oh oi

ha wa pioy ji.

h xap o a o whih h a ha phap

o i paaig h wha o h ha ay

Noi a, who ha ha a a h a ho

o hi o-Noi Eopa oag, hogh hy

a a o a h a x y h Eopa

ii ( ha) a apiai ha hi o-Noi

Eopa oag a appaig oiaio. Li

pia qiy (PE) opai ha ao ha hi y h

paiig aia a aiy. Thy a ig a

a ag io o a a (NAV) ha ig pi-

o i, xp i h i o h oowig

h Lha Boh ah. Ahogh h aia iaio

ao qay ai, h a y w iiaioha h wi a p a io a h ya ago. Th

aia aiiy o PE opai i ao aiay high,

whih ay ao iia ha io o NAV ay xag-

ga, a a a oo a o a i appi

( ao h Pia qiy io).

h yld h h c

Fiay, i h Lha Boh ah, w ha ha a

o o poii ai owa opoa o, p-

iay i h High Yi g. ag ha ha

o i, h i ha pai i h a

ag a h o a, a ow i. Thi oia-

io ay a ha hi a pi a ig

ow a i ig p. Low i o oaiy a ha High Yi gai go ha

qii ig a p pha. W ha i how h

pi o i a ha o o ig h pa

wo a oowig pio wh h VX oaiiy ix

ha i ao o 4. Sh high oaiiy ay

iia ga a aiy a oii wih ag -

o, whih o ao p yig oppoii (ai-

ioay o qii). i ao how ha o a

a a gop, w oh a a p i oaiiy, ha i

a po w, ao ha High Yi i ha

i a ha x o oh a a, oh

i o aag a aiiy.

vlu c c l

Th a po o o o y h, a h

pi o ow-a a a a, o o, i aiy

pi. B a y ow aaio aoay p-

o o o hio agai ow, whi

h pi poia ho goo. Epiay aai i

h a ha o g o aiiaio ho aoay

f o a h i o poi aiy goo

.

Cclu: Tho who i ha h a wi ay

o a o oa aio ho a a oo a Noiqii gay, Aia qiy a phap ao

a High Yi o . Aia qii a go po-

iay appa aai a ig qa. Fo ho

who a ig a po i a wh h aio

w i a xp i xa aoa, Noi

a ha, pia qiy opai a qii wih o-

a high gowh op wih ag xpo o gig

a o hioiay a aig appa o piay

aai.


DATES SINCE THE S WHENTHE VIX BROKE THE 4 LEVEL

Equities Governmentbonds

Corporate bonds withlower credit ratings (HY)

Commodities

4, 1998 31.7% 5.1% 5.0% 5.2%

, 21 2001 13% 7.4% 2.8% 9.8%

uu 2, 2002 7.3% 5.0% 25.7% 21.9%

Oc 3, 2008 6.8% 13.9% 23.7% 21.7%

Ju 9, 2009 25.7% 7.4% 52.0% 20.6%

m 7, 2010 15.3% 10.3% 14.7% 24.1%

vg U 10.1% 1.8% 19.7% 10.0%

When volatility has risen, it has usually been accompanied by positive market perormance not so surprising in itsel.

Worth noting, however, is that High Yield bonds exceeded both equities and commodities in the recovery phases, bothon average and in terms o the best/worst period.


18/37

19

h

The most likely scenario is a continued slow,

choppy upturn in the OECD countries...

...which will bring modest growth in the value

o risk assets

In a worse or better scenario, the outlook or

returns will be substantially dierent

Th a goa io wa pipio a wa op

wih h wo aia ii i gaio. Th oy

ha a i i- wa iiiay api pay a -

io o h pio p i h ooi p

i h ha oh ow a hoppy. Th ao o

hi ggih w i i ai i h a Invest-ment Outlook(pih Sp , ). o

ipoa oio w:

Duringthepast40years,upturnsthatfollowedrecessions

i h ECD oi a y pai

ha gay ggih. Uyig h -ay

io wa h -pi a a ii i h US.

Commonfactorsbehindsuchsluggishnesshavebeen1)

h wa o h hoig a, ) ha hoho a

i ha ia hi aig / hi

i a ) ai jo pop ha ha ha-p opio. Thi i ao, h ha ao a

ga o g-ighig i ay oi.

Theupturnshavebeencharacterisedbyampleproduction

apaiy i o oh ao a a apia. Thi ha

o ow o a pi p, paig h way o ow i

a. Th p ha h o oi o og pio.

Jgig o hioy a , h a ay

iiaio ha h o iy ao aio o h x

w ya i a oi ow, hoppy ooi p i h

ECD oi a a who ( a io i h o zoig ), wih ow iaio. W a aigig a p

poaiiy o hi ai aio.

A pa o ooi gowh w ow h

ighy ha 4 p aay o h goa ooy

i aay o piay a. Mo ha h pioa ii i aio pa o h wo i h a-

hogh o iiaiaio i h a h y (Ro

Bao & Jo Ua, Maoooi Ci i ,

Brookings Papers on Economic Activity, ).

m u c

Coo aoooi a i h gowh -

io ha ) o a gowh ha h hioia

aag, ) ow iaio, ) wa ao a, o wih

iig poy a 4) ow o owha iig ho

pi. Aoh oo ao ha h xi o

aia i o aio i i h o a, i haig o, i h oig xhag a whih p-

po h a ha h a p aia ii wi

ao a i ipi o h ooy o ay ya o o.

Hioy ao ay how ha ig pio o ooi

gowh whih i igiay ow ha , o q-

iy i ha ow a o o ha

high ha hi hioia aag. Dig h po-

wa pio, qii goay ha ao p

aay i ow-gowh pha, opa o ao p

o aag. Copoig g o o i ha

ao 4 p a . p .

How, o ao a a i hi pi o i-

. Th xi o iaio i o h ao. Low

gowh op wih iig iaio ha a piay

aoa oiaio o aia a, ig i )

h ow o qiy i ha oa, )

ow o o ha oa a ) gai

o oy a ii.

US aii i h i- how ha i pio wh

h ao io ha haai y a oia-

io o ow gowh a high iaio, qii ha pai a-

ag aa o - p , i pio o high gowha ow iaio o ha p .

Macro environment the key to returns



19/37

20

i duh w OCD d m

Coiig h wi gap w oiio i h ECD

oi a h gig a (EM) ph, i i ow

ao ipoa o iigih w hi pop oh i

o gowh a i . Whi ay ECD

oi h a ay, Spai, Fa a Japa a g-

gig wih ajo gowh po ha appa o og-,

h i a a gowh ooo i h EM oi a

Chia, ia, oia, Agia a Ria.

Hioiay, oo, h ECD oi piay i W

Eop ha pio o y ow gowh o o

ha h EM ph. Th pi o a wo-p wo oo-

y ay h o a ig h x - ya.

Cclu: Ou c l lw, ch whd lw h OCD cu wh hh

wh d d h m h.

Hioy how ha pio o ow gowh p y -

io a y aia i i h o ha

ay haai y ow o qiy i-

ha h hioia aag, whi ig h pio

o ha poi ao-aag . Aoh ao

ha ho a io ao i ha qii (a oh

i a) ha ay i high i a ow-

iaio ao io ha i a high-iaio o. Fo

a io, i i ao ia o pay h o h a

aoooi oiio a pop i h EM ph

ha i h ECD oi.

l c

Gi h high o ooi a aia aiy

ow paiig, h i ao ao o oi how aai

aio igh oo.

fcl c ha h o w

iw a o poa i a p, ghi io

i h o zo a a o aia ii ha ha

goa oagio , wih oh h ECD oi a

h wo ooy ippig io io. Aoig o h

aioa Moay F (MF) iio, a goa -

io o wh wo ooi gowh op ow p

. Th i o aio, piay i h ECD oi,

ao ia igiay i hi aio, o whih w a a-

igig a p poaiiy.

, o h oh ha, h aag o Eopa go-

aia po po xpy o, a h

a i a h Aia a Chi ooi x

xpaio, hi igh a o ul

c ha i o ai aio, wih gaay aaig

GDP gowh oh goay a i h ECD oi o h

x op o ya. Poaiiy: p .

Uc h l

Wha, h, igh h hyh o h aai oo-

i aio? Th g o aiy wo pay a ajo

o, a i h aia a o o h a o

aiy i h VX oaiiy ix (opio pi o h S&P

qii ix i h US).

Dig p haai y ow ooi gowh o-

owig io a y aia i i h

p, whih ga i i- h VX ix ha ay

a gaay. B ha ha o hi i ao.

Boh i h pig o a i a , h VX

ix oa. ha ao how ajo aio o w

o w a i o oaiiy ai h oaiiy, o o pa.

Th ai a ha h oig ii i

Eop, iig i o a, qio a aoUS a poiy a hoppy ooi poa.

xap o a ajo gai aa o i Ag-

Sp, wh woi ao Eopa a US go

a, a US io a a ha aig i Chia aa

a h a i. Th VX ix oa o 4 i high

i h p aia a ya .

h viX h lc d c

Wh h VX ix i, hi iia ga ooi a

aia woi. Th p i h ix oiaiy oii

wih aig pi o qii a oh i a, whih ao

ipa gowh hogh aio ha.


Th: Mao io h y o

UUULLy vOLiL

Source: Reuters EcoWin

1992 1995 1998 2001 2004 2007 2010

0

10

20

30

40

50

60

70

80

90

Percent

0

10

20

30

40

50

60

70

80

90

The VIX volatility index which reects nancial market

instability has usually allen during economic upturns, but this

pattern has not applied during the current recovery. Instead the

index climbed sharply both in the spring o 2010 and in the late

summer o 2011. The main reason is recurring worries about

European government nances.


20/37

21

a aiy ay a hoho o ho

o o yig apia goo a a i o po-

po apia pig iio, hy owig gowh.

Moig o ao h ooy o Eopa go- a o US a poiy ay h aiy o

-ig. h x ag, ow gowh wo wo

go aia oiio, h aig o woi,

aig hoho a i o hi op-

io a apia pig, a o o.

i ho a oio i o h ooy i ia

aiy ao go a a/o h ooy

qy o h x op o ya i

a iig o oay aig VX ix i hi wo

io h iio i i ao a a o a

oi wih o gai aai aio.

vuu ccl d c

h a way hogh i h oppoi iio poii

a o go a a/o h ooy

igh aiy a a h VX ix o ga-

ay a. Th oo aog hoho a i wo

h ipo, opio wo ia a o apia

pig wo o. Thi wo oo gowh a ipo

go a, o opii a i p -

a, a o o. A io i wo h o h

iig o i o o aoa aai aio.

A aia a ao h wo a goai a wo-

ogh, oh gai a poii a iay

ai wowi ia aia ha. Thi a ha

a aaig aa i h G ooy a poii i-

iay a o oy aia a, hoho a

i i Eop, ao ho i ay oh pa o h

wo. h a way, piigy og Aia oo-

i g a iiay ha a poii ipa i aia

a o h oh i o h go, aig hoho

a i h o xpi a ipo.

u l c

A gai aio o goa io a aiaii wo i o jg ha a ipa o a

a ii o h pio o o ay :

py aig i a pi a iig go o

pi. Th a o ipoa i, how. Fi, a

goa io i iy o a p a h a o (wo

GDP . p i ), i h ooi poiy

ooi i ay py i pa o h ECD. So, h

i ow igiay oo o high go o

pi. aiio, h o o ay po oi ha

-a a i a. Th oiio o High Yi

o ( h Fix io io) a ao igiay

oay ha i , o i hi aio h o

ho po aiy w opa o ay oh i a.

A o aoa aio, wih gaay aaig

gowh, wo a o a aoa pio o i i.

Aa o qiy i, o xap, ho

p a a o a pa wih h po-wa aag ( p), whi o o i o oi wo poay

ow ha h hioia aag (. p ). High Yi

o wo poi oh a high ao a o a

i-aj , whi i i h oig o

o o po oi (h a a) ay phap

i pi pi.

Cclu: cu uc wll w c

; dcl wll ld c.

a wo aio, h pa i a a wo

ii o h a aia ii. Ri a a o, how-, iy o a a h i a a h, piay o High

Yi o, a h oo o pi ia o go

o i o oi i ow ay a.

a aio, i a wo a i ay

a ho a o poi qa o high ha

hioia aag. hi aio, oo, High Yi o ap-

pa aai i oh ao a ai . Bo o

ai po oi ay po o jo i h pa.

Th: Mao io h y o


US, GDP volume growth, year-on-yearUS, Dow Jones industrial sharesUS, Merrill Lynch, High Yield index, USD

World, Dow Jones Commodity Price Index, USDUS, yields on 10-year TreasuriesUS, consumer prices, year-on-year


71 74 77 80 83 86 89 92 95 98 01 04 07 10

Index

25

50

100

200

400

800

1600

3200

6400

12800

25600

Percent

-7.5

-5.0

-2.5

0.0

2.5

5.0

7.5

10.0

12.5

15.0

17.5

mCO ky O U O

Economic uctuations and other changes in the macro envi-

ronment or example the trend towards lower ination since

the early 1980s strongly inuence returns on assets. Govern-

ment bonds have been avoured by alling ination, reectedin gradually lower yields/rising market prices, but such risk as-

sets as equities and High Yield bonds also benet rom lower

ination. Commodities were a airly boring investment or

a long time, but over the past decade they have occasionally

ofered excellent returns. High Yield bonds usually lose lessvalue during recessions than do equities and commodities.


21/37

22

Asian and Nordic stock markets should recover

lost ground

No strained valuations in historical terms,

despite stock market rally

While sticking to our long-term positive view o

equities, we are more deensive in the short

term

Aoig o Wiipia, a hi i a oy ha -

p, io a xi a h ai ,

ia oo h a a high o aiipaio, a-

high xpaio, aiy, axiy, p (a)

xi a h i a h o-p o ipo-a ioaio.

Th oa a wi aay ha po h iiaiy

w h hi g a h wo o aia

a. Ry, wh w hi w igh o o a

oai a a o o h woo, h ha a

y owa oi pi, aig h a i

a i o iio. Eooi, aia a poiia oi

ha h o ah ha h xpio ig h pa

w qa.

o a Investment Outlook(pih Sp ,) w ag i ao o io hoig o o hi

qiy xpo a hay a i ig a -

. Ma ha a aaiay oh o h oio o

a goa gowh a a gowig a o yi i

(api i aia iiio oow y a iqiiy

qz). Aoig o o o, a w ioig

aiy aih gowh i wo GDP o ao . p , whi

ooi o aag w xpig a o opiii

gowh aio o .-4. p o h oig oh.

A a oq o hi ipay, w a ha i/-

wa aio ao aiaiig qiy xpo a

ha poiy iio, pay goa, wo hopy

iiia a o o aiy p . By h o

Sp a iaig i i a poig paag o-

io o Eopa poiiia a o g a ooho i h

a. A h oh o a EU i o o -,

poiiia ag o xpa h Eopa Fiaia Saiiy

Faiiy (EFSF) a a p o apiai Eopa a

a G . Ma a qi ogy

a o ajo qiy ii o p - p

o h oh.

A a oq o iig qiy a, ipii x-

paio o gowh i wo GDP a a . p (wih h

S&P a ). h ai ooi ha ow

hi xpaio, hy aowig h gap. W a ow

wih a o aiioa appoah o qiy a aaio,

wh gowh i h o a i. hi aio

w i p o o ia i, a w a ha i i oo

ay o wi o h ogoig iaio i Eop a ha h

gowh ooo i qi ai.

A thriller unolds

qu


LOW vLUiO O O bUy QUii

0

10

20

30

40

50

60

70

80

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

200

400

600

800

1,000

1,200

1,400

1,600

1,800

Next 12 months P/E Next 12 months P/BV Price

One actor that avours equities is todays historically low market

valuations. The chart illustrates the ratio o Swedish market capi-

talisation to expected earnings (P/E) and to book value (P/BV). At

present these are well below their 10-year historical averages. We

see similar tendencies in Norway and in Europe generally, but the

picture is more neutral in the US, where the ratios are currently

close to their historical averages.

So: Fa


22/37

23

So a a o a y ig

iw o h pah o aia a. Whi o

ha ai i ay o, o o h o iia i

paa i h EU aia go

o yi ha i hapy a a y w ao

p . Thi i o a aia a wi qi aio

y h Eopa Ca Ba (ECB) a EFSF o ig yi

ow.

Fao ha ao qii i pi/oo a

(P/BV) aio a pi/aig (P/E) aio w ow -

ya hioia aag. Thi i i og oa o h pi-

ig aio i h a wo ajo qiy a ow i

a . Th opoa o i ao i a og poi-

io, wih hahy aa h a xiiiy, aig

i w qipp o xp . Thi qa poha gay o a o i, wih 4 p o

Noi opai haig x SEB Eia ia

o aig o i a ax (EBT) y o ha p

. A hi wiig, h Q poii/gai pi aio ha

o a a ., h high i h hi qa o .

Fiaia a a y haig i a y i o /

i o o. Th a ha o qiy a ha o

i a yhoi a a i o hagig o i-

o o iiy hi qiy xpo. Th a oa o

o h Eopa oig ii ha ohaow

aa ao ha a i oiio o

a oy ppi, h a gowh, i a

oay poiy. Th i o qi oio o h o zo

ii, a woi ao oig i Eop a iy o

a aia a o i o i. How, o ai

aio i ha h goa oy wi oi a ha h

o poj wi i h hag i ow a. Eay

oay a ia haai y ih ooig h

aao o pig oh o h a pa i iy

o hi o a ia wh io iaigy o o -

aa iiio w h o a o i

oi.

Ou c dl cu u

i o Investment Outlook, w ha a a

qaiai o ai a apig h pi o i-

o a. Ba h o a o aayi

apa a hopy ai o oow, w ha ow ho-

o hi o io a a o

oo. i ipoa o poi o, how, ha a o i a

aia ipiaio o aiy a wi ap a o

a aio. ho oqy o ga a a

ao h, iw a a oo o iig how w

h a a wha w i wi i i.

Th awo o h o i ha w ao ha w

i wi h o, a o h a ia w

o . Eah ao wi aig a o a o i

poii o gai oiio o h o a i ahpi oy. Th o wi ay o - o +. Thi i

ao, w i ha h oowig ao a ga

i poia o aio o a: gDp wh,

lc, fcl lc, fcl l, lu

d cuc.

gDp wh oa i h wo ha gaay ow-

, a SEB oa i o xpio. W o oa

goa gowh ig h oig ya o j ao p .

Thi i ow ha h . p o a

ha pai i o. How, h gowh gap w

gig a (EM) a op a (DM) oi

i i xp o wi, a hi i ohig w i

h a wi pay aio o.

m lc ai igiay w gio. Th

wo appa o ii i wo, wih aiy high i-

a i h EM ph a a-oo oay poiy i

h ECD oi. Fo h o a, a xpaioay

oay poiy i pa, i ao p o wh

yo o o. h ECD oi, y i a a

iy o ai a oay xy ow ig h

oa . Thi i i wi poay ia h

Eqii


0%

1%

2%

3%

4%

5%

6%

7%

2012 2013

OECD

Emerging markets

gOW pOpC b i m p

In the West, gigantic debt mountains are likely to weigh

down GDP growth or many years to come. In emerging

market (EM) countries, especially in Asia, the prospects

are brighter. Investors will probably pay attention to this

growth gap.

So: R

EoWi/SEB


23/37

24

ooy a i appi, a h a i h i

o aiio i h i a wapo. Th a

i iy o poiiy pi y y i a ha

a pa ao zo, i hi i aay a o ga,a h i a a ipoi. How, h

i oo o h qaiai aig (QE) o. Fo x-

ap, w i ha h US Fa R wi ah i

hi h o (QE) i i-, whih i iy o h

o a. o gig a oi, how,

h i a wapo i y oa wih a aiio.

R iaio p i h EM ph i ow ao ayig

h gowo o a a o p o i-

oi oay poii wih a goo oi. Th aiiy

o ai oi o hapy ow h pi o oy i

iy o ia, piay i a ia wh goa ooi

gowh i w ow .

Th poia o ooi i ia a poiy ao a-

i igiay w i pa o h wo. ay

- W oi, go a ig

o o igh hi a poii o p aay oa-

ig i o gowig a. Thy ha i

a-ahig aiy paag i api io, a

a ai a igig oo a iy o

hap ooi gowh o ay ya o o. Epiay

i gig Aia, how, h iaio i h oppoi; go-

a ay o x oo a i ooi

aiiy a.

Fcl l i a ao ha i iy o aa io

o a o. i o ha ay igi-

ay w oi, awhi w o o i

ha hi i ig i oay a pi. Wh h

a i o/i o haio a, h a o h

US, Japa a h UK whih a i a o ay h a

a iy o p ig o oy xai y io,

a aia aiiy wi hp gi hi aoaio y gio.

Cuc a a aia wih a i-

io o a i apoi. Aog oh hig, a

wa y ay gh a oy opii

a i a. B i ay a, oay opai a ogoai ha i i if o ow wh hi poio

o a a a oa. Th h oig y i h

o ia a io ao h i o

o ho who i i oig qii. A og y

hy oi poiiy o oa , whi a wa

y oi gaiy. oay a

ia, io a high-o, iqi i

h a h US oa, Japa y a Swi a. Aig

ha h wi o qi oio o Eopa po, h

iqiiy ap i iy o oi oiaig h oig

xhag a. h a iaio i oh Eop

ay a ow, o aa ao wi haga. Thi wi poay ooiy-oia, EM

a Noi i.

d d h dc

o iia ha Aia o a ha goo po-

ia o po w i a og- ppi. Th gio

i iy o x high gowh xpaio, h gowh

gap w Aia a h DM oi ho agai o

io o. a iy o aa y h a-

iy high gowh ha Aia o, aig o apia iow

a iig ha pi. Fho, aiy a a o

aig oo pi a y i a hi, ai high ia-

io p i Aia ha ow g o a. h iaio

oi aog i pah, phaig pow wi

ia i h gio a h oi wi ao ha a op-

poiy o p o aooai oay poii.

aiio Aia, y Chia, a oa h wo

ag a p; i gay ow a h i oo

o ah ag aia i paag.

Eqii


Russia

Brazil

Chna Source: Reuters EcoWin

2005 2006 2007 2008 2009 2010 2011

-2.5

0.0

2.5

5.0

7.5

10.0

12.5

15.0

17.5

CPIinflation,

%y

ear-on-year

-2.5

0.0

2.5

5.0

7.5

10.0

12.5

15.0

17.5

iFLiO pU WiLL i m

p

Ination is about to all in many EM countries, giving

their central banks room to cut key interest rates and

thus probably stimulate growth and equity prices in the

EM sphere.


24/37

25

Th a ao ay iiaio ha Aia i wi

appia i h . Aog oh hig, og Aia

i wi a ipoa oo o aig wih h o-

o a iaa ha ha i p w W a

Ea. A o Aia oi ho ao ha a poii

ai owa ig hi y appia, i hi

wi hp a iaio p. o o, Aia i p-

y Chia a ia, a Chia wi h o i

o i o.

Th Noi oi ha aio iiaii wih Aia. Thi

gowh a i aiy a a h ow , hi

aia aiiy i goo. Thy ao ha o oo o o-

ay a a i poii. Aoh iiaiy w

Aia a h Noi oi i ha ajo io i iw

h gio a pipha a. Th o a- o o h pa ix oh ha a a

pay o hi hoig i ia a a ia

hi hi a o highy iqi o a. A

o EM o a a w a h Noi a h how

ag ha pi ow ha aa wo jiy

(i h ag o - p ), whi US o xhag

ha ho ao zo. No a h EM o Noi oi

pag y iia gowh g a gigai o-

ai. a a ia wh io a iaigy

xaiig h aa i w oi, a

o jiay p o a a iy o

gai o o go.

u z c ul u u

Th o zo o h ow o poi i o

o. Ahogh h pop a i i h oh

a oh pa o h o zo, o ai aio i ha

h gio a a who i ha o a io (aig GDP).

A oiaio o poiia iaiiy, a ighig a

a i i io wi ih ooi

gowh o h o a. No qi x i a ha ih.

R poiia oi ha o i aig

woi a. a hy ha a h wa o a

oo y io wiho og poiia ooiaio.

Looig aha, h o zo aa i iy o oia

y poiia o ha oi pa a oi

p h a, i wi poay o i o a

i a ophi pa i ip. A ph a oo ay oiig i, aig o oag

i h ii aag po. A a , a ooi-

a aio y poiia a i opioy iig. Th

o poj i pay ahig o go o a

o, a h wi poay ay if hag aha.

Fo a qii ppi, h o zo h o o ap-

pa o a gio o i i.

Eqii


COUNTRY/

REGION

Growth Monetary

policy

Fiscal policy Financial

stability

Valuations Currencies Total

Ch

u 7

dc 7

bzl

J - -

U - -

id -

u z - -

OU giOL m mODL


25/37

26

HY still tempting i risk appetite improves

Dierent monetary policy tactics in OECD and

EM spheres...

...and divergent outlooks or their government

bond yields

Risk appetite will continue to steer High Yield

prices

Th wo a a a ii io wo a. Th

ECD a i haai y o-ow y i a,

a i o a ai qaiai aig (QE) po-

ga. Si ay , h gig a (EM) a

ha gagig i gaa oay ighig h a

hiig y i a ig a ig ha o

o ah h o i ighig y.

Th wiy ig poiy iio wiy i-

g aoooi io. h ECD oi,

io i a oig po ha oia,

whi h EM ph ha haai y high ooi

aiiy, ohaig i a go a

ha h ECD oi. Looig i o ya a oay, w

o ai hag i oay poiy ai: i h

ECD a ha i h EM a.

W i ha a a i ajo iiai oi h Ui Sa, Japa a h Ui Kigo wi i

o hi zo i a poii i a a ay 4. Th

Eopa Ca Ba (ECB) whih ai i y a i wo

p hi ya a h i agai i ay No i i-

y o i a a o o a hi wi. Th ECB

o i i a wapo wi i oh y h

i o io a ay ow iaio a y h oi-

oig o h Eopa oig aa.

Th agi ooi poa o ay ECD oi

ay ao jiy o qaiai aig, aiy i h o

o go a (i o a) ogag o pha.Fo a a, h ppo o QE i o y o ahi ow

o yi a hy ao hp ai ooi gowh.

Th US Fa R (F) ah i o o

qaiai aig (QE) iiay a h oap o

Lha Boh i Sp . Ro wo (QE) ao a i hi pa . Righ ow h F

i gag i paio Twi, whih io ig USD

4 iio woh o ho- go ii i i

aa h whi yig a qa ao o og-

go o (wih - ya aii). W ao

o h poiiiy ha o i ha opp wiig a h

o J , h F wi ah QE a h y o-

gag o i o o hp ai h hoig a.

o h Ba o Ega (BoE) i o ai h

iig o i o pha y GBP iio o GBP

iio. Ao a oh ago, h Ba o Japa (BoJ) iai ii pha y JPY iio, a h oa ao

o h pha ogh wih ig o h Japa

i o ow a p o JPY iio. Boh o h

a a a xp o a h QE aio i

Fxd c


m i CULmiig

Brazil, key interest rate (SELIC)China, key interest rate (0-1 year lending rate)

India, key interest rate (repo rate)Russia, key interest rate (refi rate)


2003 2004 2005 2006 2007 2008 2009 2010 2011

2.5

5.0

7.5

10.0

12.5

15.0

17.5

20.0

22.5

25.0

27.5

Per

cent

2.5

5.0

7.5

10.0

12.5

15.0

17.5

20.0

22.5

25.0

27.5

Key interest rate hikes in the BRIC countries (Brazil, Russia, India

and China) appear to be ending, and Brazils central bank has

already lowered its rate twice this year. In both China and Russia,

the next step is likely to be a rate cut, while there is greater un-

certainty about how the Reserve Bank o India will use its interest

rate weapon.


26/37

27

Fix io

h oig ya. h a o h ECB, QE o aiy

pha o oig o o o oi wi

a y h ao a h apaiy o h

Eopa Fiaia Saiiy Faiiy (EFSF).

Whi a a i h ECD oi a iggig -

p io hi i o oo, h i wi oo ip

o a hi o aiioa oay poiy aig (y i

a ) i ay EM oi. Th ao i ha pioy

oha ooi a ow gaay ooig a ha

o a pi p wi oo a. Aog h BRC o-

i, Bazi ha aay ow i y i a wi hi

ya. ia hi i y a i o, iga ha hi

ay a h o i hiig y. ai piio i

ha ig , ay EM a a wi oow h xa-

p o Bazi a i a.

Th ooo o go o yi i h ECD o-

i a h EM ph i ao ig. ECD iaio wi

i ow a a o a a a ag

y o go o, o h oh ha pi

o ig a oo. Togh wih h po-

p o gaay iig i appi i a hi oig

ya whih ay a io i i go-

o hi iay poi owa owha high

ECD go o yi i . h EM oi,

pi o i a a a, oy a a a

aay aig, iaio i owig a go o a

pig o io i i appi ia. Cclu:

EM D i a a o aai x io i ha

ECD go o.

h yld y ll l

Copoa o piaiy High Yi ai a aai

x io aai, piay i hi yi ha

i (pi ha a) o h ig aia a

aa i Ag-Sp. Ahogh opoa o yi

ha qy a owha, hy a i highy ap-

paig. Ky ao ha wi i h poa o h

opoa o a a ) yi gap (pa) agai go-

o, ) h hah o h o-iig opaya ) ga i appi i aia a.

Thi qa aia oi a h yi gap w

opoa a go o o wi. Fo xap i

h US, pa o HY o w o pag poi

o o ha . Si h h gap ha aow o ao .

poi i ipi ha h a i piig i h wo

opoa a ha ho ow paiig.

Piig i h High Yi g ao a ha ao

- p o HY-iig opai wi go ap. B

h a apy i oi wih a aio i whih

h US a h wo qiy i io a w io, whih

o o i o o a. Dig h ooi a

aia ii o a h ha o , h a-

py a ah ao p . oay o o a-

pio a io o i , i wo h

a i ha h ay p o o - ya ago.Mawhi HY-iig opai ao h wo a i a

aia hap ow ha ig ha io.

Th a goa apy aii o High Yi-iig

opai i . p (-oh g), a

oa o h aig agy Mooy o h oig

oh a .4-. p (h aag i i 4. p

). Si h giig o , oy HY-iig o-

pai i i h goa ix (, i) ha go

ap, qia o . p .

A o h hah o opai i h High Yi o, hpoii pi p i h i o Investment Outlook

pih o Sp , i hag: a goo a-

ig , aiay ow i, a oiay

high pag o iqi a i aa h a x-

aii o opay o oa pooio.

W h o ha ga i appi wi ai h

piay ao aig HY a poa. h pai-

ig aio i a poay i-y owow, a i

goa gowh gaay gh ig a a i

i pig wih o ai aio, i i HY

o a oh i a wi poay po ha

i i ECD go o. A hi wo

oi wih h a pa i Mah .


ig yiLD bOD OUpFOmig QUii

Standard & Poors, 500 Composite, Index,CBOT, Dow Jones CBOT Treasury IndexMerrill Lynch, High Yield Master Index


Dec

2010 2011

Feb Mar Apr May Jun Jul Aug Sep Oct Nov

Index

87.5

90.0

92.5

95.0

97.5

100.0

102.5

105.0

107.5

110.0

112.5

Last spring the nancial market mood was decent. US equities

and High Yield bonds thus beat government bond investments.

But since then there have been major shits, with dramatic

price declines on risk assets in August-September ollowed by a

strongly positive October rebound. Since then choppiness has

predominated. Investment ranking so ar in 2011: 1st Government

bonds, 2nd High Yield and 3rd equities.


27/37

28

Tough market or hedge unds generally...

...but ixed income mandates in an interesting

position

Macro/Trading still a good diversication

Si h a i o Investment Outlook(pih

Sp , ), hg poa ha ai

wa. Maiy o h o zo ii, ao ix ao

aii o h Ui Sa a a o a ha aig i

Chia, h HFRX Goa Hg F x i EUR o .4 p

ig h hi qa a ha o . p o a

ig .

A ajo agi a howig gai i hgiig o h ya, wih Mao a CTA oig h

i ai , wih a ow o p . Th p-

oa o h Eqiy Hg agy ha h wo,

ow .4 p i h pa i oh. Ahogh o

ipoa iio o a o piip ha a

y o zo poiia a wih h ai o aiiig

a ay oig h oo o h ii, h x w

oh a iy o haai y aiy a

.

Exay a i h pio Investment Outlook, w a hooig

o ii h hg a io o ai agi:

EquityLong/Short

RelativeValue

EventDrivenandDistressed

MacroandTrading

qu L/h

Ma oiio o Eqiy Log/Sho ha ai

xpioay if. Coy gagig h iio o h

a wo ha qi oy piig h o

o poiia a a h a aio o h, whih

i a ipoi a. No a-a agi i

piay w; h ow wa . p o h qa.

Uaiy a high oaiiy a iy o oi oia-

ig h a, ahogh h a ajo aa qaia-

i i w opai. Qaiy opai ay

o giy aai o a aaio ppi,whi opai p o ooi gowh ay

o y a, whih i i a oppoii

o Log/Sho aag. B i oa aiy wi

a o xpo, o i o pi a

iy o ahi aig . W oi o ha a

aio ai owa Eqiy L/S ig h a

oig qa.

l vlu

Rai Va aag i x io i go a

ah goo a i Jy, whi Ag a Sp poi-

a o ix pi. Figh o a go ii

a hg aio i i appi haai h p-

io. Maag wih a gai ooo po owha

, a aag who a aiy w og a

ho poiio w a o ga poii y a-

ig wih ow, aoooi w a hia haio

i a i way.

Th aio o a a ig h qa a i h

wi a aai i oppoii o

x io agi. h US, paio Twi ga i

Sp o h ppo o pig og- yi ow.

Thi ay i io owa h ho o h yi

, whih o a a oa a High Yi opiay aai. So aaio w x ig h

qa; o xap, CDS pa pi i a apy

o p o io a o i Sp. Looig

aha, h wi poay ajo p poia o o

wh h i aoa w ao h o ii. W a

poii owa Rai Va ig h x qa.

D d Dd

Fo E Di agi, h hi qa wa o o h

wo o a. Th HFRX Di o .4 p a HFRX

E Di o . p , whi Mg Aiag oy

4. p . a, i wa h wo qa i h Aia aia ii.

Operation Twist benefting Relative Value

d ud



28/37

29

Ahogh h o opoa oi o -

a, a w pi i h a Investment Outlook, i wa

wi-ow o a pi ha a o o

h o. Di how ii o h oa ig Jy, o o wiha h oi

p ig Ag a Sp. A aag ow

h i i hi pooio, popa hoig i paia w

j o ipopoioay ag ow.

Copai oi o ha high ah a gay

og aa h. Dig a ooi ow, aio

opai wi poay high hogh o-

poa a. Thi i iy o a o a aoa i

ia o E Di agi i h , oay

i h o zo wi poay hap aiiy i

h a . E Di a Di a o agiw o a p.

mc d d

h who, Mao a CTA w h -poig

agi ig h hi qa, wih a ow o . p

. A ig pio qa, h w ajo i

w aag a hi pi woig aa. Mo

ay gai aag h i h a

o aig oy ig h qa, piay ho who

ha h o zo a hi h ig h i aio i

Ag.

h who, CTA a Syai Mao how poii

ig h qa, h oo h i w

oia. A aoaio wa ia, wih x io

hoig aoig o h ag oiio wh i a- w o o i h a.

A p, h i/oppoiy aio oo owha i

o h giig o h qa. Say gai a-

ag wi pay o ow hi oiio ha a

wi o i hi iio, whi o opiii o wi

a ia poaiiy o ig igh. Ga aiy a

igiay i a ppio ho a goo

poia o gaig .

CTA a Syai Mao a iw y o o a

a oo o pooio iiaio ha i xp o pow wh oh a a a haig ify. Hoig i

x io ii a h ig ag poiio o o

aag, whih i i igi a i o aia o i

h a iaio ipo i h og , i a-

ag a ow poiio a i o aioy hy a

a i a i hi aio. Mao a Taig ai o

hoi aog hg agi i h a .


Hg

STRATEGY INDEX PERFORMANCE %

Oct-Nov Q3 2011 YTD

(Nov 10)

2010

gll d FX gll d Fud . 6.45 -. 5.19

qu d FX qu d . -. 17.63 8.92

l vlu FX l vlu . 5.42 3.51 7.65

D FX D . 6.78 3.94 1.98

mc FX mc -. 0.85 3.72 1.73


29/37


Stable activity in a cautious environment

Flight to quality remains a theme

Continued uncertainty, not a good time or

illiquid investments

Th goa a a a ha h p w ig h

a aia a aa, ahogh a i

hogh h hi qa o o ay h a a

a a io o o owha o aio.

h a i o Investment Outlook(pih Sp

, ), w poi o a o ha w iga-

ig hi ia a aio. Dig h a , waw oh a a owa igh o a hao a

a o qaiy popi o whi ii oay

a o ao a h iio i h a a a

ha wa gig a a o ga wo ooi -

aiy a a igiay o oai oig xhag a-

. Ra a a ipy oo o i o o. Ba

o h , h wa y ao o owha o

aio owa hi a a ig h o qa.

How, h hi qa o owha ha

a, a aa ow how ha h wa aiy a

o oy o oh i o h Aai ao i h Ea.l dl cu u d c

Th o o i i aaio i h goa

a a a o y p ig h hi qa

opa o h a pio o a ya. Jo Lag Laa

a a a a po how ha o a qa-o-

qa ai, aiiy i h Ui Sa a y og

gowh i h o qa. Mawhi aaio o

o i oh Eop a Aia. Ya-o-ya, aiiy o i a

gio.

Eop how ai aiiy pi aaig oig po, pay o ay aaio o h

o qa, i wa oagig o a ha gowh

wa i poii opa o oh h a qa a a ya

ai. Aia, a op w ix; i h wa

o i aa ia ai hi ya, Japa ao o

a ag popoio o poii gowh. Chia ao how a

oi xpaio i aiiy, pi h ighig a-

a ig h ya. Aaia h wa ow

aiiy, how, a Sigapo wi a hap i i

aaio o ig h hi qa.

Real estate market holding up well

l

USDb

illion

0

10

20

30

40

50

60

70

80

90

100

2007Q

1

2007Q

2

2007Q

3

2007Q

4

2008Q

1

2008Q

2

2008Q

3

2008Q

4

2009Q

1

2009Q

2

2009Q

3

2009Q

4

2010Q

1

2010Q

2

2010Q

3

2010Q

4

2011Q

1

2011Q

2

2011Q

3

Americas EMEA Asia Pacific

L ivm iCD i

UOp

Europe recorded greater activity in the real estate

market during the third quarter o 2011. Activity

remained high despite escalating sovereign debt

problems, partly because a number o delayed

transactions rom the second quarter closed in the

third. One positive surprise was that volume never-

theless rose both quarter-on-quarter and year-on-year. EMEA = Europe, Middle East and Arica.

So: Jo Lag Laa


30/37

31

l l lc

Th a a ha ao ii ig h a.

Boh aiiy a ha gay a. W

h og a poa i Aia, wh a

o of iig i paia oi o gow, whih ao

ph p i ay pa. How, h w

i owa a owow i a i h aia

ii o Hog Kog a Sigapo, wh o-

wha. Eop, oh aig aiiy a o i-

way. Th a o a i ajo Ga ii ai

og. h UK, Loo o a a wa ha. Th

wo aiiy wa o i h US, wh a o a

oi o a ig h hi qa. R, how, h

p w pi aig a. So pa, h a Sa

Faio a Nw Yo, ao po high .

Cud cuu ud wd

Ahogh h goa a a a a a who h p w

ig h a, i ha oioy ay a y

a . Th i aio ha a pay-

how ig h a i i i pa. o

a ig iy qaiy popi a a i o -

iy ai wih h i pi i h o h a,

ahogh h a oa xpio. a, h o i o

wha i a io i wiig o a, ah ha o wha

i i poi o ahi.

A o h owa aaio aig a og i o

op, w a po ha i i oiig. Coi oa-

iiy i h oig xhag a a woig oppoi-

i o oa aig whih ay ao y w ioa

h i h ia a ao why a a

i oi o a og o op, a a a-

jo a.

B w wo i o poi o ha a a aaio,

pi h ay, a i ig o. A opii a

a h igh po: h ay pai-i igh o

qaiy ha w aw ai i h a ha a o. Thi i i h a ha yi qi o qaiy pop-

i a o og hiig a h. Mawhi w a ig

o i i h i pi i owha ii a,

iig h US. Thi i a iga ha o io ha -

g o o pwa o h i a i h a a a,

i i i oo ay o i whh hi wi a ho-

o h giig o a ao.

h llqud

Eooi aa ha ay wa ig h

a, h a i aio ag i ao o

a a a a a a. Coi a gio wih apoo ppy hoag ha awhi ha

ooi gowh, h a Aia ao pa o h US a

Eop, ho a o how a oi aoa

i . A og a yi qi i h a

ai a a , aaio o xiig pop-

i ho i aog wih a io. B a w ha

io pioy, h a i a o o qio a

ao h poa a hah o h oa ooy.

paia, aw o qio a o h poiia aga

wi ha a ipa o h ooy.

Th i popy a i igiay o iiqi ha

h a o qii, x io i a o-

oii. F aag piaiig i h a a a

h o a io o oi hi apia o a og pi-

o. Fo hi ao, a a w a i i a y ai

aia a iaio, i i if o jiy hi yp o

i. A p, w a h hooig o ai o h

ii i h pi ha o a.

Ra a



31/37

32

Financial turmoil and economic uncertainty

keeping PE company market prices depressed

Continued decent earnings growth in portolio

companies, stronger nances = stable NAV

Large discounts to NAV indicate that the market

is pricing in continued problems, good support

or share prices rom undamentals

A w ow, i h a Investment Outlook(pih

Sp , ), aia ha oi.

Eopa a o po ha o i-

aigy appa. Mawhi h goa ooi haaay i pi pi. Ahogh Eop i i o

i oig owa a io, iga o aiy a

gowh a oig o h Ui Sa, a h Chi

ooy o aig i a oy ahio. A

aai pi i o i a ig Ag, hi

pi ha o iway o i o a ighy pwa.

Pia qiy (PE) ha po aiy w i

oh. Si h a Investment Outlook, h SEB Li

Pia Eqiy F ha i y . p , wih ag -aio aog h way. How, pia qiy ha a y

o ha p hi ya, aig i o o h a

a wih h ag i. Th qio i whh

hi ow i ji, ifi o xagga. o

a i i xagga, poi ha h wo (a

Eop) i o o i way owa a ajo aia ow

a/o a pio o a io.

L dcu v

Thi ya pi i o pia qiy o o opo

o ow i h a a (NAV) o PE opai.

h oay, NAV o ig h ha. Th hi qa- po o w a ao igaig a NAV o

h opai. Faig ha pi a a NAV a

iaig io o NAV. Piiay ia iia

ha h aag io o NAV i ow ao 4 p .

Wih h xpio o a w oh igh a h Lha

Boh ah, h a h high io w ha

iig h o a ah o h ay

.

i o o aa ha h io a iaig i hi

pha. Th a i xpig PE opai o wi ow

h a o hi pooio opai i h wa o

ga owwa iio o gowh a aig oa.

Ba o h ow gowh apio, PE opai

oo h qi i hi aaio o, whih

ao ow NAV. Th a io hi, wih aig ha

pi a a oq.

How, h a ao o i ha h pi i

(whih ha o h iig io) ay xagga.

NAV ai aiaoy ig h pa qa pay

a h yig i gay po

w. Rpo o Aia opai i paia how

oi goo aiiy i hi opaio a agy a

aig xpaio. Rpo NAV o Eopa opaii ao agy a, w a ig o owow i

aig gowh.

p qu


Risk aversion creates overreaction

UDvDLy LUmpD Og Wi FiCiL

60

70

80

90

100

110

120

2010-12-31

2011-01-14

2011-01-28

2011-02-11

2011-02-25

2011-03-11

2011-03-25

2011-04-08

2011-04-22

2011-05-06

2011-05-20

2011-06-03

2011-06-17

2011-07-01

2011-07-15

2011-07-29

2011-08-12

2011-08-26

2011-09-09

2011-09-23

2011-10-07

2011-10-21

2011-11-04

Equities: MSCI World Index

Private equity: LPX 50 Index

S&P Global 1200 Financials

It seems reasonable that the shares o listed PE companies have

perormed worse than the stock market average, given their

higher leveraging and larger dependence on nancial stability.But price declines as large as the hard-pressed nancial sector

seem like an overreaction.

So: R EoWi


32/37

33

o a, NAV ha ai aiaoy a ai

po NAV wa oo oaiy. May PE opai

ha po hi pooio opai a o, hogh

i ay a iig po ji iig hi aaiopwa. Togh wih go pi o ow iqiiy

(o opai ha po ag poio o hi ho-

ig a p o ia NAV), hi ha poi a ag

aaio hio. Ao iaig hi i h a ha ay o

h pooio opay i ha o a i

a ay i o a pi o p o p

o po NAV. Thi ay a a pay o h o

aig opay a.

d ul h c

Th a ha h io ha i a aig NAV.

W ia ha h a ha pi i po ow i

h ag o p . Th i a a oaio w

aig ha pi a aig NAV. Thy o i h a i-

io, hi a aiohip a h iz o h o-

ha ai aaiay. Th ga aiy ha

pai ao ooi gowh (whih o o ao

a h a o opai, po ipi a o o)

a i if, i o ipoi, o aw xa oio.

B i o a, h ha pi i a owha

xagga.

Ao aig a if i ha PE opai a

p o oh ioig aia a (o a-

i o o pooio opai) a ig a(a o oowig a o a o oh ig).

Wh h a a wa, h o a o

ow PE opay aaio. Thi ay pay xpai h ag

ha pi i.

A o h ig iaio, i i ipoa o o ha PE

opai ha woig aiy wih hi i

h a aia ah. Thy ha ow hi oa oow-

ig a agy x h aii o hi oaig

. P ipy, h wa o po ha opai

a a ya o o ago o gigai ha w aig

ha iay o, ahogh o a

ha ii hi aiiy o pooio opai(xi). h xi a a o io a i

a popo, h a ao o aj i aaio

o PE opai aoigy. Thi i o aoa i

i, h i a i o xaggaio. Th p a o

h po o a i i o a h

og i i popo, i gowh i hi ay a

a paiay o y iig a ga y opay

po.

Aoh ao o a io ao i whh h a ay

ha xagga h i i PE opai. Th qaiy o hi

pooio opai i gay high ha ay o

o i. Dpi high agig i ay a, h

pio y p io a h a aia ah

ai w ii oy ao . p o pooio o-

pai w ap a ha i. Th ajo hag ha

h goa ooy a aia y a aig aay

ha a a ipa o h PE o. Ba o aia

a , ho- oa o aaio

a o o a o hy ha a ha o ah hi ipi-

. Thi ao a og- oa ay ai.

i a, how, ha h o h i ha aay

pi i.

Si PE opai a igiay qipp oay,wih o a a a oai aaio, h

i- aio appa aai. a aio xp h

o piii o a, h ag o h i appa

o ii ha i oh high-i i, whi h po-

ia o oy ho ah goo. Th i, how, a

poia o wa poa i h ho , gi h

a i o o og- o h a-

ag ha i aig h Eopa aia y.


Pia qiy

-60

-50

-40

-30

-20

-10

0

10

2003 2004 2005 2006 2007 2008

H1

2008

H2

2009

H1

2009

H2

2010

H1

2010

H2

2011

H1

2011

H2

-60

-50

-40

-30

-20

-10

0

10

Listed private equity

Secondary market

Lg DiCOU FO LiD p

COmpi

Discounts to NAV have widened as prices o listed

PE companies have allen. Preliminary estimates

show discounts o around 40-45 per cent, on a

par with earlier records (except or a ew quarters

ater the Lehman Brothers crash). The discounts

on secondaries are signicantly smaller; the most

value can be ound among listed companies.

So: Thopo Fiaia, JPMoga, SEB


33/37


World economy will provide support or prices

Limited downside or metal prices

Falling agri-commodity prices as worries about

production disruptions recede

Dig h o a , ooiy pi h p

aiy w i pi o ga aiy a woi ao

ooi gowh. a a ay a, how,

a o ooii y a a aig

pi. i pi h ai a ao USD

p a (B).

Dpi y aaig o ao op i

oh Eop a hi ipa o goa ooi gowh,

oi pi ha ai a o ao USD /a. A

igh ppy/a iaio o oh i a haig oi

i pig pi p. Thi iaio wi poay o a, ow

ha h Aia a ig hi haig ao wih

ia a o gy. aiio, Chia ha hi

y ogh, aig o a hoag o hyoi pow ha

i ig o y ig i gao . Low Eopa

oi o, y a o o i-ya ow, a po-

iig h ppo o oi pi.

Dop i h Mi Ea a Noh Aia (MENA)

hi pa ya igiy ha h gio ow ha ay ya o

hag aha. Thi wi poay o a iy paipo; ia, o i o i wi

seb report: corporate bonds emerge as safer investment choice

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