Middle East has both good and bad bets: LGT Capital Management
Roger Groebli, ED, Head of Financial Markets Analysis, LGT Capital Management spoke to ET NOW
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| Roger Groebli, ED, Head of Financial Markets Analysis, LGT Capital Management spoke to ET NOW
What is your sense of this entire crisis now given that market has staged very strong pullback and of course a major bit of that is attributed to the kind of noises being heard in the US on this matter?
I think the market is able to distinguish between the good and bad bets also in the Middle East because certainly Saudi Arabia, Abu Dhabi, and Qatar they don't have any financial issues. I think there is not much of pressure for the rest of the world. I think the pressure relies more in the fact that a lot of currencies impacted with respect to the US dollar and all these countries which are not impacted to US dollars are facing a high deficit, and I think this will leads towards more tension in 2010. So my guess is that we see more kind of deglobalisation process. I think the market is already focussing on what might be the pockets of opportunity in 2010.
What in your opinion would those opportunities be, what is the market talking about particularly when it comes to investment into emerging markets such as India?
I am bullish for equities also for the first quarter in 2010 of course we will see how the companies were doing so the earnings season in January will offer the first realty check but on the other side one of the big opportunities will remain actually diversification away from the US dollar and this is still the commodities and if our economies actually they did study how much the currencies are backed by gold and is a very low surprisingly a very low ratio because the currencies backed by gold is between 1% and 4% of the GDP in most of the countries that means when Central Banks stop buying gold again in order to diversify away from the US dollar gold will see much higher prices as well since it takes some time actually to bring out gold out from the Europe. So I think to make the story short commodities and in particular gold will remain in the limelight of investors as well as actually is equities because equities last but not least stocks of certain protection against inflation as well.
Very quickly, Roger, your view on the dollar and in lieu of that gold?
Our economist still expect that the dollar is going to debase actually, there is a longer trend and will not stop so much and as we always say a dollar remains a dollar so the Americas are not particularly interested in a strong dollar and we could see the impact is that goods are becoming cheaper to import for most of the countries.
What is your sense of this entire crisis now given that market has staged very strong pullback and of course a major bit of that is attributed to the kind of noises being heard in the US on this matter?
I think the market is able to distinguish between the good and bad bets also in the Middle East because certainly Saudi Arabia, Abu Dhabi, and Qatar they don't have any financial issues. I think there is not much of pressure for the rest of the world. I think the pressure relies more in the fact that a lot of currencies impacted with respect to the US dollar and all these countries which are not impacted to US dollars are facing a high deficit, and I think this will leads towards more tension in 2010. So my guess is that we see more kind of deglobalisation process. I think the market is already focussing on what might be the pockets of opportunity in 2010.
What in your opinion would those opportunities be, what is the market talking about particularly when it comes to investment into emerging markets such as India?
I am bullish for equities also for the first quarter in 2010 of course we will see how the companies were doing so the earnings season in January will offer the first realty check but on the other side one of the big opportunities will remain actually diversification away from the US dollar and this is still the commodities and if our economies actually they did study how much the currencies are backed by gold and is a very low surprisingly a very low ratio because the currencies backed by gold is between 1% and 4% of the GDP in most of the countries that means when Central Banks stop buying gold again in order to diversify away from the US dollar gold will see much higher prices as well since it takes some time actually to bring out gold out from the Europe. So I think to make the story short commodities and in particular gold will remain in the limelight of investors as well as actually is equities because equities last but not least stocks of certain protection against inflation as well.
Very quickly, Roger, your view on the dollar and in lieu of that gold?
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Our economist still expect that the dollar is going to debase actually, there is a longer trend and will not stop so much and as we always say a dollar remains a dollar so the Americas are not particularly interested in a strong dollar and we could see the impact is that goods are becoming cheaper to import for most of the countries.
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