SAFE HAVEN IN TROUBLED TIMES..IOM EXAMINER 13/7

Investors could look to good and Real Estate

Historical ‘safe havens’ such as high quality bonds and gold should continue to reap benefits from investors as the struggle to recover from recession continues.

Economic growth is slowing but not stalling, a breakfast meeting in Douglas heard.
Willem Sels, HSBC head of fixed income strategy also said: ‘Volatility is set to remain high for some time. Hedge funds should be well placed to take advantage of this environment.’

As part of the latest HSBC Private Bank Quarterly Investment Outlook Mr Sels commented on what he called the move from cyclical optimism to structural pessimism.

He told his audience at the Sefton Hotel: ‘There is no quick solution to structural hurdles. Consequently we believe historical safe havens such as high quality bonds and gold should continue to benefit. ‘

He added: ‘One way to hedge against a set of uncertainties that are not solely growth orientated but also driven by questions over what now constitutes a safe haven is an allocated to real assets.

While we see good opportunities in real estate markets, gold is likely to be the main beneficiary of this trend.’

Mr Sels said the dichotomy between improvements in the current recovery and the abundance of structural issues is ‘likely to create a volatile market environment. In these uncertain times, we (HSBC) prefer assets and sectors that are relatively sheltered from the direct effects of the sovereign debt crisis, bank regulations and slower growth.

“To us, this implies a greater focus on the private sector and real assets such as real estate and gold.

‘The Structural growth story in emerging markets appears intact, but we prefer to gain exposure to these markets through developed market exporters that have been unduly penalised by sovereign debt.’

Mr Sels told his audience which included investors that HSBC continues to have an optimistic outlook for the performance of hedge funds over the next year.

The bank believes that the USA is a good indicator of the future recovery.

Mr Sels said the USA ‘benefits from a relatively strong economic backdrop and a flight to quality.’

He added: ‘We have grown more cautions on the emerging markets in light of the beginning of tightening measures, holding a neutral view with a negative bias on China and India. We believe the outlook for Europe is bleak, but expects exporters to non Eurozone countries in particular German exporters – to benefit from weaker euro.’

Writers name

Cowley Groves

Advertisers Company:

Cowley Groves

Advertiser's website:

http://www.cowleygroves.com