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FK: Market Commentary A Publication of

Finanz Konzept AG

3rd Issue 2018

News: Wikifolio - a social trading platform for the future à continue reading on page 9

Stock Markets: The market stagnates - has the economic cycle reached its end? à continue reading on page 5

Bond Markets How will the end of the Eurozone‘s Quantitative Easing (QE) affect European bond markets? à continue reading on page 6


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Table of Contents

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Editorial

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Short Summary

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Stock Markets

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Bond Markets

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Forex Markets

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Commodity Markets

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News

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Our Services Portfolio Analysis

Imprint Publisher: Marketing: Composition: Assistance: Frequency: Design: Images:

Finanz Konzept AG Schulhausstrasse 42, 8002 Zurich, Switzerland Lars Oberle, Daniel Köchli Daniel Köchli Victor Culmann, Nicolas Jordan Vierteljährlich Tim Has, has@finanz-konzept.ch Milan Rohrer, Josefstrasse 20, 8005 Zürich

Disclaimer This document was created by the Finanz Konzept AG. The opinions stated in it are the property of the Finanz Konzept AG at the time of compilation and can be revised at any time. The market commentary is only intended to provide information and to be used by the recipient. It neither represents an offer or a request on the part of the Finanz Konzept AG to purchase or sell stocks and bonds. Reference to the performance in the past is not to be understood as an indication for the future. The information and analyses contained in this publication were compiled from sources, which are regarded as reliable and credible. However, the Finanz Konzept AG is not responsible for their reliability or integrity and disclaims any liability. Assets in foreign currencies are subject to change in currency exchange rates. Neither this document nor copies thereof may be sent to the United States or taken there or be distributed in the United States. It is possible that the distribution in other countries can be restricted by local laws and directives. This document may not be copied without the written approval of the Finanz Konzept AG. Order the Market Commentary: via E-Mail: info@finanz-konzept.ch via Post: Finanz Konzept AG Schulhausstrasse 42, 8002 Zurich, Switzerland

FK: Market Commentary 3rd Issue 2018


Editorial

Dear customers of Finanz Konzept AG and other readers, This summer, it is not only the FIFA World Cup in Russia that keeps the population on their toes and provides some unexpected surprises, but also global politics and business are making headlines. The EU is struggling with government crises in Italy and Germany, Donald Trump’s trade tariffs are still causing heated discussions in the US and North Korea’s leader Kim Jong Un, with his summits with both the South Korean and American presidents, is creating hopeful prospects in Asia. A mixed picture that can present investors with problems and difficult decisions. Our market commentary is made to help you make the right decisions. In our current market commentary, we look back on these events and analyse their influence on the stock, bond, currency and commodity markets. In the

News section you will find further proof that Finanz Konzept sees digital change as an opportunity and can generate added value for our existing and future customers. We wish you a lot of pleasure reading the 3rd issue of our market commentary and a successful summer. Yours sincerely,

Daniel Köchli CEO

FK: Market Commentary 3rd Issue 2018

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Short Summary Money and Capital Markets 31/03/2018

30/06/2018

3 Mt.

12 Mt.

CHF

0.024

-0.068

à

EUR (DE)

03494

0.303

à

GBP

1.343

1.278

à

USD

2.741

2.860

à

JPY

0.046

0.031

à

à

Certain emerging market currencies offer an interesting risk/ reward profile Interest rates in Switzerland and Europe remain record low, forcing investors to take high risks Interest rate spread on high-yield bonds in Europe remains too low

We recommend: • Short-term US government bonds (USD) • Reduce High Yield Bonds • Diversification via selected emerging market dual-currency bonds

Stock Markets 31/03/2018

30/06/2018

3 Mt.

12 Mt.

SMI

8766.70

8609.30

EUR Stoxx 50

3335.69

3395.60

FTSE 100

7044.74

7615.63

S&P 500

2640.87

2718.37

Nikkei

21392.42

22304.51

DAX

11956.34

12306.00

     

à à à à à à

• • •

Increasing volatility and risk sensitivity The summer months are prone to corrections The economic cycle reaches its peak

We recommend: • Companies with high dividend payments and/or share buyback programs • Take advantage of positive market phases to reduce shares

Forex Markets 31/03/2018

30/06/2018

3 Mt.

12 Mt.

EUR/CHF

1.1755

1.1577

à

à

EUR/USD

1.2331

1.1685

à

EUR/JPY

131.0400

129.3300

à

GBP/CHF

1.3373

1.3086

USD/CHF

0.9539

0.9907

• •

EUR After a Strong Correction with Slight Recovery Tendencies JPY still undervalued

We recommend: • EUR/USD currently neutral • CHF slightly underweight • Overweight JPY

Commodities 31/03/2018

30/06/2018

3 Mt.

12 Mt.

64.94

74.36

à

1320.83

1253.18

Silver (USD)

16.37

16.11

à

Platin

932.00

852.00

à

We recommend: • Hold precious metals for portfolio diversification • Increase gold share in the event of further setbacks

Crude Oil WTI (USD)

Gold

(USD)

(USD)

Crude oil with strong rally due to rising global demand and artificial supply reduction by OPEC Silver undervalued with short-term anti-cyclical opportunities

Crypto Markets 31/03/2018

30/06/2018

3 Mt.

12 Mt.

6939.33

6391.50

à

ETH (USD)

394.2110

453.8500

à

XRP (USD)

0.50030

0.46786

à

à

BCH (USD)

686.1266

747.95

à

LTC

116.2581

81.0100

à

à

BTC

(USD)

(USD)

FK: Market Commentary 3rd Issue 2018

• •

Bubble correction still in progress Wait for a bottom for strategic repositioning

We recommend: • Use very active trading strategies • Prefer bitcoin/etherium over the other crypto currencies


Stock Markets

The Market Stagnates - Has the Economic Cycle Reached Its‘ End? The return of volatility, the escalation of global trade disputes and the Italian crisis, which could put both the continued existence of the euro area and the common currency to the test - all these environmental factors are currently causing investors headaches and keeping the stock markets on their feet. Now, of course, the question arises as to whether these trouble spots will lead to the aging economic cycle entering a phase of downturn or whether the underlying global economic data is still strong enough to withstand these disruptive factors. In fact, it seems that the sentiment data in both the United States and Europe still provide enough fuel for the global economic engine not to become infected by the prevailing circumstances. The EU’s combined purchasing

managers index (manufacturing and services) rose from 54.1 points to 54.8 points in June, underlining the still positive sentiment. Data from the USA and Switzerland also show a similar picture. Nevertheless, we believe that the economy will slow down slowly over the next 12 months and that economic growth has reached its peak. However, such a phase need not cause investors too much concern, as it is only the logical consequence of an aging cycle and which, given one is prepared and draws the right strategic conclusions, can also be used profitably. The summer months, which are prone to corrections, could once again offer the last chance to increase the equity ratio and then gradually reduce it in the following months. As far as equities are concerned, our multi-factor strategy also focuses on companies with high dividend payments and share buybacks (total return strategy).

FK: Market Commentary 3rd Issue 2018

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Bond Markets

How Will the End of the Eurozone‘s Quantitative Easing (Qe) Affect European Bond Markets? A few days ago, the European Central Bank (ECB) announced the end of quantitative easing (QE), which means that it will significantly reduce its bond purchases, which it had done over the last four years. As a result, credit costs would increase, corporate investment would decrease and growth would slow down. Coupled with the geopolitical uncertainties mentioned above, the question arises whether the currently still robust European economic area will be able to cope with this problem. Only when this question has been clarified can the ECB even think about the first interest rate step in years. An increase in interest rates in good times is extremely important in order to calm the markets in bad times. We fear that the ECB has missed the right moment for an interest rate move. When the economic cycle peaked at the beginning of the year and the United States, for example, took this as an opportunity to raise interest rates, Europe deliberately refrained from doing so in order to avoid endangering the stable economic situation and artificially devaluing the euro. As the third longest upswing since 1900 will reach its limits in the next 12-48 months, the ECB is

FK: Market Commentary 3rd Issue 2018

running out of time. The ECB announced its first interest rate hike in mid-2019 at the earliest. We believe that longterm interest rates are likely to rise slightly with the end of the money glut, but there is not enough time to reach an interest rate level to make conservative savers happy in the coming years. Consequently, only over-indebted countries, which can continue to refinance themselves favourably with loans, instead of carrying out strenuous reforms, will be happy. Unlike the ECB, the US Federal Reserve has done its homework and is already in the middle of a cycle of interest rate hikes. As a result of this development, US government bonds with short maturities are attractive. US Treasury bonds significantly reduce the volatility of a portfolio during an economic downturn and should therefore tend to be included in portfolios in the coming months. We advise European investors against covering themselves with high-risk bonds due to low interest income. The premiums for these risks are simply too high (1-2% interest against 10-15% loss potential). Diversification into high-quality bonds from selected emerging market currencies (e.g. IDR, INR, RUB) offers better opportunities.


Forex Markets

The Predicted Drop of the Euro Has Occurred - What Happens Now? As announced in the second issue of this year’s market commentary, the EUR/USD pair fell below the 1.21 level this quarter and then went into a veritable downward flight, which only stopped just above the 1.15 level again. Italy, which is politically and economically fragile, is constantly shaking the common currency. The government of the EU’s flagship Germany is also no longer as stable as it used to be. Should Chancellor Merkel’s cabinet ever be replaced by a regime critical of Europe, the EU and the euro could be steered in new directions. Nevertheless, the picture of the common currency should not be painted too dark, especially in the short term. The euro still enjoys the support of the majority of EU citizens and the sentiment data are, as

described above, quite positive. This could give the euro stability in the near future and prevent it from falling below the 1.15 level. Over the long term, it is difficult to predict how the EUR/USD pair will behave. However, if the EU gets the acute trouble spots under control again in the coming months, as it has done several times in the recent past, and the US economy flattens out a little at the same time, a rise back above 1.21 is not unlikely. When you hear the word “crisis” or “economic downturn”, this usually means an appreciation of the safe currencies Swiss franc and yen. This is also the case in this quarter. We assume that the Swiss franc, should the National Bank not intervene, will settle at its current level and wait for the course of the economic cycle before gaining strength during a downturn.

EUR/USD course of this quarter 1.25 1.24 1.23 1.22 1.21 1.2 1.19 1.18 1.17 1.16 1.15 1.14

FK: Market Commentary 3rd Issue 2018

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Commodities

„Reduce Pricing Now!“ How‘s the Oil Price Reacting to Trumps‘ Demand? Brent Crude Oil course of this quarter 82 80 78 76 74 72 70 68 66

“Reduce Pricing Now!”, US President Donald Trump tweeted in early July in the direction of the oil cartel OPEC. Indeed, our oil price reduction forecast in the last market commentary did not materialize in the second quarter of 2018. On the contrary: the price per barrel has once again made a strong leap upwards and is now above the 75 dollar mark. Among other things, this had to do with considerable bottlenecks in production in both Venezuela and Iran. Whether Trump’s demand for lower prices will be met in the next three months seems questionable, especially since the US government itself is cutting off a potent supplier - Iran - from the market and thus

FK: Market Commentary 3rd Issue 2018

further reducing the oil supply. We therefore assume that the price will remain at the current, relatively high level for some time to come. In the longer term, however, we see the price of oil returning to a slightly lower level of around 65 dollars per barrel. As has been the case for some time, the prices of the two classic precious metals gold and silver were more or less sideways in the last quarter. This is likely to continue as long as no new impulses are released that should appreciate or depreciate the US dollar. Gold also offers a safe investment for each portfolio in order to diversify it and successfully reduce its volatility.


News

Wikifolio - a Social Platform for the Future

Trading

“In an era of global networking, digital exchange and increased individuality, the prevailing investment opportunities must also be adapted to the new environment.� The Austrian-based social trading platform Wikifolio is dedicated to this goal, which is why it offers private traders, professional asset managers and renowned financial media the opportunity to implement their trading ideas in a social network. A wikifolio represents a fictitious reference portfolio of a trader (private individual or asset manager), in which he can pursue his specific strategy and present it to interested investors. If a Wikifolio finds enough supporters, an exchange-traded Wikifolio certificate can be issued on its basis, in which anyone can invest via their bank or online broker. The trader can thus gain new prospects and new customers without great effort, while the investor has the opportunity to pursue the most suitable strategy from a large number of wikifolios at low cost. We are very pleased to inform you, dear readers, that Finanz Konzept AG is the first asset management company with a connection to a self-regulatory organisation in Switzerland to be recognised as a partner of Wikifolio and that we can now offer our clients this promising, future-oriented service. The platform offers the possibility to profit from our know-how independent of banks. If you have any questions or suggestions, please do not hesitate to contact us. Our Wikifolios can be viewed online: https://www.wikifolio.com/de/ch/p/finanzkonzeptag

FK: Market Commentary 3rd Issue 2018

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Our Services

Our Core Solutions for Your Personal Needs. Private and Institutional clients appreciate our independent and professional services in all the areas of wealth management and investment advisory. Benefit from our competence and experiences and join us as we head into the future. Wealth Management: • Active Asset Management • Advisory Mandate • Execution Only • • • • •

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Financial Services: • Real Estate Services • Asset, Liquidity and Retirement Planning • Legal, Foundations, Trusts • • • •

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FK: Market Commentary 3rd Issue 2018


Portfolio Analysis

How Well Does My Portfolio Comply With Me? For many investors securities are an essential component of their retirement provisions, while others mostly want to maximize their ongoing income. For one, security is their main focus, while the other is prepared to accept risks in exchange for opportunities. The quality of a portfolio is therefore primarily measured by how well the investment strategy and investment goals fit together. A security portfolio is more than just the sum of individual shares and investment funds. On the one hand, we mix together the risk and yield profile of your overall portfolio on the base of your investment goals and your personal situation, on the other your current statements of deposited securities. We calculate probabilities of default and yield expectations and compare your portfolio with the benchmark (comparison index). We present this analysis to you, together with our proposals for optimisation in a personal conversation.

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Market Commentary 3rd Issue 2018  
Market Commentary 3rd Issue 2018