OREANDA-NEWS. March 11, 2013. In February, the global stock market showed the mixed dynamic. While in January everything was bought everywhere, in February the major financial markets began to live its separate lives, and the dynamic of the indexes of different countries was mainly determined by internal factors.

However, there was a general central theme - increased tension around the European Union and the eurozone due to a political scandal in Spain, the loss of the highest rating by the United Kingdom, and the negative results of the elections in Italy, following which it became apparent that stable government is unlikely to be formed, which in turn brings into the question of country management in the difficult economic situation.

Given such news, nervousness returned to the markets, and many short-term players preferred to hold the previous months’ profit. As a result, the half of our monitored indexes closed the month with a rise and half – with a fall, and world stock index MSCI WORLD closed the month at zero. As always, the most affected were the most speculative markets of developing countries, which led to decrease of the MSCI EM index by 1.4%. Most likely, the world index would show the negative result over the month, but the situation here was "saved" by Ben Bernanke, the statements of which regarding the continuation of QE policy encouraged the US index growth in the last days of February and allowed them to go in the plus zone.

Manager of the stock funds continued taking measures on portfolio restructuring to ensure the currency risk reduction. However, after negative trends appeared in the stock markets, it was decided not to rush with new purchases and to hold the wait-and-see attitude. Our assumptions about possible correction were right, which allowed restoring previously closed positions at more attractive prices. General view of the market is moderately positive, mainly due to the influx of money in the stock markets (inflow into global stock funds and ETF in January was a record one since December 2006), and therefore the basic strategy is to "accumulate on the decline".

In the bond markets of developing countries, previous month dynamic was continued. Government bond market continued to be under the pressure on expectations of US debt yield growth. The difference compared to January was only in the fact that while in January the main sales were concentrated in bonds of countries with high investment grade, in February at the general negative background decline in prices was on the whole range of bonds. Not that it was aggressive selling (except for Argentina, where litigation over the decision of the American court to pay money to two hedge funds that refused to restructure defaulted debt began again), rather, slow slide in prices, however, an apparent lack of customers led to a reduction of the market. Slightly more affected were the bonds of Eastern Europe, given the events in Spain and Italy.

Again the good stability was demonstrated by the CIS corporate bonds, prices of which have not changed, which is, in our opinion, based on the high coupon yield and relatively low duration, which allows easy enough to outwait the overall negative trends.

It should be noted that, considering the general situation on the financial markets, we expected some decline in the bond markets in the short term, and therefore, the cash was the large part in the funds structure. Using the current correction on prices and spreads increasing across the entire bond market of the developing countries, it was decided to restore the previously closed positions, since the current level of profitability, in our opinion, already are at attractive levels. Moreover, after confirmation by Ben Bernanke that the US Federal Reserve will maintain its policy of low interest rates for a long time, we believe the potential for further price reductions is limited.