MENA Asset Management Survey 2012 - National Bank of Abu Dhabi

Global Trends
expenditure. This could be a sign of corporate retrenchment or of rational expansion -
Capex is less easy to reverse than a hiring decision.”
ASSET CLASS PREDICTIONS
Fixed income
ING IM believes that the risk profile in fixed income is turning as a result of a turning of
the global cycle and signs of over-extension in investor flows into credits. Once nearterm
political risks have passed a modest rise in treasury yields can be expected and
credit flows might be redirected to other asset classes
The investment manager remains overweight on emerging market debt local currency,
and spread products. It has recently moved EM FX to its only significant overweight
within fixed income spreads and has bought high yield, senior bank loan and emerging
market debt hard currency back to a small underweight. ING IM has recently upgraded
those asset classes where it feels the largest part of the risk premium normalisation is
still to come – European Peripheral Treasuries to a small overweight, and Investment
Grade Credit to neutral (from a small underweight).
Overall, ING IM believes that the case to move from credit to equity is building.
Equities
ING IM warns that analysts’ estimates of equities are far too high, with 2013 bottom up
earnings still coming in at double-digit growth levels. This is in contrast to ING IM’s
corresponding top down earnings estimates of less than 5% in the US and close to 0% in
the Eurozone.
Patrick Moonen - Senior Equity Strategist, ING IM - expects “continued negative
earnings momentum in 2013, but strong corporate balance sheets. This good financial
health, combined with low interest rates may lead to a rise in corporate spending, more
M&A activity and Capex, provided corporate confidence returns. He also expects to see
more buy-backs and higher dividends - average dividend growth of 3.5% in Europe, and
6% in the US over the next two years.”
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