VP Bank sees strong rebound but lackluster growth later in the year

VP Bank Group, one of the largest private banks in Liechtenstein, today presented its financial market outlook for 2010 at a press briefing in Singapore. The bank also offered their investment advice in view of the expected “root”-shaped global economic recovery.

VP Bank anticipates a “root”-shaped economic recovery ( ) above all other predicted shapes as it sees a strong initial rebound in early 2010. However, slower growth rates than before the crisis will follow. Fiscal consolidation and higher interest rates will suppress faster progress. 

VP Bank warns against a double dip in Europe. Emerging Asia is growing faster than the rest of the world due to higher growth potential flanked by an overall recovery in the G-7. Much of the growth in the advanced economies results from the base effects of moving up from the depressed output levels of the first half of 2009, as well as higher investment spending and net exports. “But we are pessimistic about consumption in Europe”, stated Dr. J?rg Zeuner, Chief Economist of VP Bank Group.

“VP Bank forecasts modest inflation in the US, Japan and the Eurozone until the end of 2010, with rates not exceeding 2%,” said Dr Zeuner. “Asia, on the other hand, is experiencing greater inflationary pressures, and central banks in Asia may have to tighten monetary policies earlier than elsewhere”.

“Despite this, recovery in Asia is in full swing now.” added Dr Zeuner. “In fact, growth in US and Europe pales in comparison, with a conservative estimate of 2.5% growth in the US and 2% growth in Europe for 2010.”
In view of a “root”-shaped economic recovery ( ), VP Bank recommends local investors to consider the following recommendations for their investment strategy:

- Overweight stocks across all regions
- Overweight emerging market bonds in local currency instead of investment grade bonds
- Prefer short over long bond maturities
- Reduce cash
- Maintain strategic levels in alternative investments
- No gold, as gold only has short term potential

Singapore, 27 October, 2009 –  (Nanyang100.com)