Gonet Bank: Monthly Review December 2009 - Bank’s Strategy, Economy, Asset Allocation, Equities, Bond Markets. The Theme of the Month: Royal Dutch Shell - restructuring, production growth and the dividend yield provide an interesting re-rating potential
Introduction
The world economy came out of the severe recession stemming from the crisis of the financial engineering, thanks to the dynamism of emerging countries and to very accommodating monetary and fiscal policies. Overcapacity remains plentiful while demand is penalized by a lack of
purchasing power, what limits the future growth. The financial difficulties of an important company of Dubai reminded the investors that the financial crisis is far from being over. Banks will still have to recognize important losses on their credits or their financial products, while the State support for the sector must be maintained during several years. This event brought back some volatility
on financial markets. The price of the gold does not stop climbing, proving the nervousness of the investors stemming from an excessive monetary creation. The cyclical improvement is henceforth widely reflected in risk markets (equities and commodities), further to the important bounce since March. Corporate results were better than expected for the third quarter, both with respect to profits and to sales, what is reassuring. The evaluation of the stock markets is not exaggerated yet. As long as the monetary and fiscal authorities do not harden the tone, the risk-taking should remain rewarding, in the absence of credible alternatives. However, waves of profit tacing become more and more likely. Therefore, it is recommended to remain watchful, by seizing the opportunities as they arise. ( Read more) (pdf)
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