07 February 2015
MONACO BANKING: KBL Monaco Private Bankers hosted an investment conference at the Hotel Metropole in Monaco, at which Jean Danckaert, CEO of KBL, gave a presentation to more than 100 guests, including clients, partners and industry peers...
Among the topics addressed were the fact that historically-high sovereign debt levels are casting a shadow over the 2015 global investment outlook, according to the investment experts of KBL European Private Bankers. Frank Neter, Chief Investment Officer of KBL in Monaco and his colleagues Marie-Hélène Royet, Head of Portfolio Management, and Philippe Giordan, Head of Advisory, presented the group’s annual projections for the world economy, financial markets and key asset classes.
At a time when the majority of developed nations operate with debt-to-GDP ratios in excess of 80 percent, states are disincentivizing saving, including through the quantitative easing process that has led to today’s near-zero interest rate environment, according to Neter. As governments, especially in Europe, seek to promote individual borrowing and spur inflation, investors are now struggling to generate sustainable returns above the rate of inflation.
In such an environment, Neter said, two asset classes hold particular appeal: equities, particularly those with pricing power and growing dividend streams; and property, where landlords have the ability to raise rents.
From a macroeconomic perspective, Giordan expressed cautious optimism about the world economy, saying that while eurozone growth will remain subdued next year, it would nevertheless accelerate in the second half, supported by potentially positive oil-price impacts. Meanwhile, the US economy is expected to expand by 3% in 2015, driven by positive trends, such as credit growth, corporate innovation and reshoring.
Giordan highlighted that Japan’s economy will remain vulnerable, but should grow by just over 1% next year, supported by higher export levels, increased productivity and potential growth in domestic power production. Commodity importing emerging markets like China and India will have a strong 2015, he added, while commodity exporters such as Brazil and Russia will face ongoing challenges.
Turning to asset classes, Royet expressed a preference for US and Japanese equities, as well as listed global real estate, expecting them to outperform primarily due to the reasons cited earlier.
Fixed-income investors face a challenging 2015, she said, though the outlook is appealing for dollar-denominated emerging market debt and peripheral bonds. Among currencies, the US dollar will maintain its strength versus the euro.
Royet concluded by reviewing the outlook for commodities, saying that oil prices will likely remain under pressure and gold may fall, while agricultural and industrial commodities should remain stable.
KBL is a top-20 private bank in Monaco and member of Luxembourg-headquartered KBL European Private Bankers