Electrolux ZC24/10F Manual de usuario descargar pdf (Pagina 22)

PARWORLD (Société d’Investissement à Capital Variable)

fallen marginally to 2.5% in August, which is still above the ECB’s target of close to, but below 2%. However, as core inflation was only 1.2%

in August and as the economy has slowed significantly, the tone from the ECB has changed. It is unlikely to raise rates further this year and

markets are even reckoning with rate cuts. As banks in Greece, Ireland and Portugal, but increasingly in the other peripheral and even some

core countries are facing funding problems through the markets, the ECB was forced to provide liquidity to prevent a meltdown.

The Fed has stayed more dovish than the ECB. With the economy slowing and deflation becoming a threat again in the summer of 2010,

the Fed embarked on QE2, a program in which it bought USD 600 billion in Treasuries from November 2010 to June 2011. Although the

economic recovery stayed frustratingly slow according to Fed-chairman Bernanke, the central bank was reluctant to embark on another

stimulus program. The slowdown in the economy may be strong enough to do so, but the deflation threat that caused the Fed to embark on

QE2 has been absent. Headline inflation is currently running at 3.8% (August) compared to 1.1% in June last year. More importantly, core

inflation which was at 1% in June last year and trending lower, is now increasing. Nevertheless, the weakness of the economy caused the Fed

to first announce that it will keep rates exceptionally low until mid-2013 and more recently Operation Twist. In this programme it will sell

USD 400 billion of short-dated Treasuries on its balance sheet and buy longer-dated paper in an attempt to flatten the yield curve.

Currency markets

At the end of the reporting period, the euro stood at practically the same rate against the US dollar as at the start; USD 1.34 per EUR at the

end versus 1.37 at the start. In between there were some large swings though. In October last year the euro continued an upward trend versus

the dollar which had started when the Fed had hinted at more monetary stimulus. In November the euro had reached 1.40. In December the

euro declined again, after the sovereign bond crisis flared up again and Ireland had to be bailed out. However, as the eurozone economy did

not appear to be affected too much and as the ECB started tightening monetary policy, the euro gained ground from 1.30 in January to close to

1.50 in May. That was the peak for the reporting period and from late May to August, the euro traded roughly between 1.40 and 1.45. Fiscal

troubles in the eurozone were matched by a slowing US economy and a political impasse about cutting the government deficit. In September

the euro lost ground as the sovereign crisis intensified.

Just before the start of the reporting period the Japanese authorities had tried to stop the appreciation of the yen versus the US dollar and had

sold yen to an equivalent of USD 20 billion in September. This only temporarily weakened the yen. Appreciation soon returned and the yen

ended 2010 just below 82. From there yen appreciated further versus the US dollar to 76.8 at the end of the reporting period. The biggest

moves in the yen were seen right after the earthquake and the tsunami. Large repatriation flows caused the yen to appreciate to below 80, a

development disliked by the authorities. Central bank intervention caused a spike to 85 in early April, but this proved to be temporary. In a

general climate of risk aversion, the yen functioned as a safe haven and continued to appreciate.

Bond markets

Towards the end of the reporting period US and German bond yields fell to record lows. Twelve months ago US yields stood at 2.5% and

German yields at 2.3%. This was already low from a historical perspective, due to low growth in the summer of last year, record low official

interest rates and fears of deflation, mainly in the US. In late summer of 2010 the US Fed announced another round of quantitative easing with

the aim of keeping bond yields low. This initially caused bond yields to fall, but when the Fed started buying bonds, yields actually started to

rise. The economy showed signs of improving and the wave of liquidity caused risky assets to perform well. Oil prices also started to increase

strongly. In the first half of 2011 this was aggravated by unrest in the Middle East and North Africa. Bond yields peaked at 3.7% in the US

in February and at 3.5% in Germany in April. From there they started falling again. The temporary soft patch in growth seen in the second

quarter of the year proved to be stickier than thought and recovery hopes made way for recession fears. The ECB stopped hiking interest rates

and the Fed initially pledged to keep rates low to mid-2013, followed by another round of stimulus. At the end of the reporting period US and

German bond yields had fallen below 2%. Risk spreads on eurozone peripheral government bonds have surged, especially in Greece, Ireland

and Portugal. In the last few months of the reporting period they stabilised or even fell somewhat in Portugal and Ireland, as these countries

made more progress in cutting deficits than Greece. They have remained high from a historical perspective though. Risk spreads on Italian

and Spanish bonds have also widened and could only be kept at bay by heavy intervention from the ECB.

Equity markets

Developed equities have fallen by 6.4%, while emerging equities have plunged by 18%. In the second half of 2010 equity markets moved

sharply higher. Fears for recession which had emerged in the summer appeared to be overdone and the liquidity injected by the Fed under its

second round of quantitative easing was clearly supportive. Meanwhile, profit growth stayed strong and above expectations. The Irish bail

out in November caused only a short correction in the strong bull run. The rally in developed equity markets continued until February 2011.

By then the markets had to cope with several headwinds, including political unrest in North Africa and the Middle East, higher oil prices and

possible rate hikes by the ECB. On top of this came the natural disaster in Japan. Thus, markets corrected sharply in early March. Positive

earnings numbers and the consensus view that the soft patch in US GDP growth was only temporary led to a rally in April, taking developed

equities to new post-financial crisis peaks. From there on developed equities declined. The soft patch in US growth proved to be longer-lasting

while the eurozone struggled with the fiscal crisis. There were no earnings numbers to offer support. Emerging equities weakened from the

start of the year to the March correction in developed equities. Rising inflation and significant monetary tightening increased fears of a hard

landing in some emerging economies. However, the return of risk appetite in April was also beneficial for emerging equities. They strongly

outperformed developed equities in March and April. After the peak in late April/early May, emerging and developed equities moved lower

in tandem, although the declines were somewhat stronger in emerging equity markets. Earnings continued to be strong in the second quarter

in the US, but weakened in Europe. Nevertheless, equities could more or less hold on to earlier gains until the end of July. At the end of July

and in early August equity markets tanked. The sovereign bond crisis in the eurozone intensified and in the US a government default was

only just avoided, as the country’s debt approached its self-imposed ceiling. Still the debt was downgraded by one of the rating agencies.

Meanwhile, the soft patch proved to be sticky. US employment stopped growing and leading indicators weakened significantly, some into

recession territory. Thus, equity markets gave up all the gains of the previous twelve months.

Luxembourg, October 18, 2011

The Board of Directors

Note: The information contained in this report is given as a matter of record and is no guide to future results.

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