Ulster Bank Wealth Launches its Global Investment Outlook

19th April 2010

Ulster Bank Wealth today launched its bi-annual Global Investment Outlook. The report outlines that as the global economy moves through the recovery phase, growth sensitive assets such as equities and commodities should provide Irish investors with the best opportunities. The report explains how investors can best respond to the implications of ‘global economic rebalancing’ which represents a fundamental structural shift in the global economy.

The Outlook also examines the divergences that are emerging in the growth outlook for the major economies such as the differences between the US and the Eurozone performance. It also considers the potential for investment in emerging market equities, bonds and currencies which all continue to offer interesting opportunities, along with blue chip European companies with high sales exposures to emerging economies.

“The world's major economies have now emerged from recession and global economic recovery is gaining momentum. While markets initially rose in anticipation of economic recovery, they are now being underpinned by real improvement in macroeconomic indicators and a more positive outlook for corporate earnings. The good news for those who feel they missed out on investment opportunities in 2009 however, is that the global stock market recovery continues and there is potential for further positive returns”, said Brian Feighan, Managing Director, Ulster Bank Wealth.

The report comments on the challenges facing the Irish economy in light of the steps that policy makers and regulators are taking to fix the banking system, reduce the deficit and restore Ireland’s credibility and reputation in the international market place.

Brian Feighan, said, “A key feature of the global financial crisis has been the way in which bond markets have reasserted themselves as the ultimate arbiters of a nation’s financial health. For all the commentary we read every day, there is only one verdict that truly counts and that is what the international bond market has to say about Ireland’s recovery plan.”

“At the time of going to print with this report, the spread (or risk premium) between 10 year Irish Government bonds and their German equivalents (“Bunds”) has narrowed to 1.33% compared to 2.84% this time last year. This is in stark contrast to Greece where the trend is the exact opposite with the equivalent spreads on 10 year Greek Government bonds having now widened to 3.44% over Bunds. This trend clearly indicates that, notwithstanding all of our difficulties, we are on the right track,” he added.

The Ulster Bank Wealth Outlook also carries commentary from a panel of Ulster Bank experts who examine the potential opportunities for Irish investors.

Alan Dunne, Investment Director, takes a look at the global economic recovery and how it may result in global economic rebalancing and bring with it more sustainable economic growth in the future.

John Fahey, Investment Strategist, considers the outlook for equity markets and pays particular attention to earnings, valuations, risks and the areas of opportunities for investors within equity markets.

Simon Barry, Republic of Ireland Chief Economist, gives his outlook for the Irish economy, and expects growth to return by Q4 of this year, dependent on continued growth for Ireland’s main trading partners driving external demand.

Carl Astorri, Global Head of Economics and Asset Strategy, Coutts & Co, takes an in-depth look the potential of an impending debt crisis and details historical examples of sovereign debt crisis following on from high levels of borrowing to jump start growth. He outlines how investments in gold and inflation-linked bonds can be used as a hedge against this risk.

Michael Casserly, Investment Analyst, assesses the outlook for commodities and outlines a positive outlook for oil and industrial metals.

Uwe Ketelsen, Global Head of Alternative Product Research. Coutts & Co, examines the future for the hedge fund industry and explains why hedge funds have averaged and impressive gain 19% in 2009.