Tuesday, November 30, 2010

7 Key Calls For 2011 By SocGen

Global Asset Allocation team at Societe Generale makes following 7 Key Calls for Multi Asset Portfolio in 2011:
>> Key Call 1 – Buy EM Bonds without currency hedging vs USD or EUR in order to get exposure to EM FX. Growth profile, strong public balance sheet and the quest for yield should continue to support net inflows.

>> Key Call 2 – Long Nikkei / Short HSCEI (Hang Seng China Enterprise Index): Asian inflation would be welcome in Japan, but would trigger policy tightening in China.
>> Key Call 3 – Long Corporate Bonds BBB / Short Corporate Bonds AAA: The lower-rated categories are set to outperform the higher-rated ones as the spread compression process slowly continues in H1 and investors keep looking for yield instruments.
>> Key Call 4 –Steepening of 30Y-5Y US yield curve as the Fed's QE2 programs will concentrate on 5Y maturities and are likely to feed long-term inflation threats.
>> Key Call 5 – Long Global Telecom Services / Short either Global Capital Goods or Global Utilities: prefer the high dividend yielder (Telecoms) over either the low dividend yielder (Capital Goods) or expensive and riskier assets (Utilities).
>> Key Call 6 –Buy 10Y Australian government bonds (in AUD): strengthening currency, AAA-rated offering a 5.5% yield in an environment where the market is starving for yield.
>> Key Call 7 – Keep long exposure to Gold: in order to hedge against the debasement of G4 currencies and rising long-term inflation threats.
While this is quarterly update, 8 months ago the calls were like these ...

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