OREANDA-NEWS. March 06, 2012. Since the end of the past year, investors have become more active and a certain cool-down can be felt on the capital markets. Most forecasts promise a better year for investors, compared to the previous one. There is less fear of a global economic recession and the actions taken by the central banks have alleviated tensions within the financial system; however, the debt crisis in the euro zone continues to cause concern, says the report Investment Outlook, prepared by SEB Group, reported the press-centre of SEB.

Simply put, there are three factors that affect the price levels of the markets: liquidity, macroeconomic trends and fundamentally justified price levels of assets. In recent months, all those factors have had a positive impact on the markets, thus increasing the optimism and risk tolerance of investors. Head of the global investment strategy unit of SEB Group’s private banking, Hans Peterson, believes that the New Year brings along stabilisation, however, he warns about dilemmas that several European countries need to address. “For instance, how much austerity should countries struggling with budget deficits endure ? on the one hand, in the light of a weak economy and social dissatisfaction and, on the other hand, in view of the demands of the creditors,” said Mr Peterson. Nevertheless, 2012 has great potential to be a good year to invest and the second half of the year should be better than the first, Mr Peterson added.

“In case of a positive scenario, the shares will generally yield a better return while the shares of cyclical companies and perhaps of the banks will have the competitive edge. A better scenario also gives a good position to commodities, especially industrial metals such as copper, currencies tied to commodities, and high-risk bonds. If the developments are more on the negative side, not too many investments should be made in shares and high-yield bonds,” said Mr Peterson.

“Most of the forecasters believe that positive surprises could be expected more in relation to the US economy while the negative surprises are more likely to occur with the European debt crisis,” said the senior economist of the investment strategy unit, Lars Gunnar Aspman.

“We are in a situation where extremely friendly monetary policies create a clearly favourable context for risky assets. The more so as the cumulating global problems and politically unacceptable unemployment rates indicate that the period of negative real interest is likely to persist for a long time,” added the private banking strategist of SEB Bank, Peeter Koppel.