Beverly Chandler, Opalesque London: In their latest publication Lyxor Research writes that risk assets are set to generate positive returns for the
remainder of 2013 driven by a slowly expanding global
economy and ultra accommodative monetary policy. "We
believe that the familiar pattern from the last three years
of 2Q data disappointment and consequent risk off is
unlikely to repeat itself."
This improving picture Lyxor ascribes to ECB policies over the past year plus liquidity from the Fed and Bank of
England. Lyxor believes that these factors should prevent contagion from idiosyncratic risk
events like Cyprus or Italian elections. "Global growth
should also stay resilient because of spare capacity and
reversion to the mean, though at modest levels" the firm writes.
However, they believe that several risks are still highly visible including volatile
economic data, the U.S. fiscal retrenchment and
European austerity efforts. "Emerging market growth is
less dynamic than anticipated. These risks are well
known and explain the generally high equity risk
premiums globally. We believe that the world continues
to normalize in 2013 and the reduced risk premium is the
primary driver of equity returns. We have an attractive
view of equities among the various asset classes. We
continue to prefer equity over fixed income and favor
developed over emerging equities."
Lyxor comments that the aggressive stimulus in Japan is the lat......................