Investment Newsletter - December 2012

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Investment Newsletter December 2012

Crystal Clear? As 2012 draws to a close, thoughts inevitably turn to the year ahead. We thought we should dust off our crystal ball and share our predictions for 2013. As always, don’t hold us to them! Nobody can predict the future but here are some educated guesses for the main asset classes.

Equities to take off? We’ve said for a while that equities look undervalued based on company fundamentals. Over the past year we’ve seen some decent returns but the FTSE 100 is still below the 6,000 level. There are several reasons markets are not higher. It is not generally because companies are not doing well but because of “macro” economic concerns. Some of the main concerns for 2012 have been: • The Eurozone crisis • A slowdown in China • The US economy In our view, we could be about to reach a tipping point. One by one these concerns have receded. Europe finally reached a deal on Greece, Italy and Spain can now borrow at sensible levels, whilst there seems to be more of a consensus on how to move forward. Let’s hope Mr Berlusconi’s new bid for power doesn’t throw a spanner in the works! The data from China is pointing to a turnaround in their economy, and the dreaded “Hard Landing” looks to have been avoided. The US economy has done well this year but there are concerns over the “Fiscal Cliff”. We have written about this before and we are sure you are bored of hearing about it (we certainly are). However, we believe this cliff will become more like a gentle slope and the US economy can continue to grow. If this hurdle is removed, the last of the major barriers to markets moving ahead will have fallen away. Whilst risks still remain, the opportunities are immense.

Equilibrium Asset Management LLP (a limited liability partnership) is authorised and regulated by the Financial Services Authority. Equilibrium Asset Management is entered on the FSA register under reference 452261. The FSA regulates advice which we provide on investment and insurance business; however it does not regulate advice which we provide purely in respect of taxation matters. Copyright Equilibrium Asset Management LLP. Not to be reproduced without permission


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