Reporting 4th quarter 2019


The recently completed quarter has yet again brought a pleasant increase in value to the investors in virtually all asset classes. This was primarily triggered by monetary policy interventions on the part of the central banks such as, for example, interest rate cuts by the US FED. The first indications of a settlement within the trade dispute between the US and China have also been favourably received by the investors.

In 2019, the equity investors could though profit from the fact that the share prices jumped by more than 20 percent virtually anywhere in the world. The underperforming markets were overall the Asian ones, due to the trade dispute between China and the US, and the UK, due to the Brexit issue. The highest performance was achieved mostly by the technology stocks as well as by stocks in the small and midcap sector.

In the reporting quarter, the first indications of «higher» interest rates in many main currencies could al-ready be considered for medium and long-term bonds. Above all in the US, the yields of the long-term government bonds have recovered significantly from the lowest values. Also, in Sweden, we have recently seen a renunciation from the central bank as far as the negative interests are concerned.

Over the last weeks, the CHF was in a position to slightly increase against the EUR and the USD, and also the EUR could rise somewhat against the USD. Considering the last 12 months, these three currencies have actually remained in a rather narrow range.

After a swift increase, gold remained within a narrow band at USD 1500 per ounce and even though the volatility of the crude oil increased, no clear trend could be followed so far. Also, the industrial metals such as copper were not favoured by investors until recently when they were finally in a position to free them-selves from a low level.


How high can the share price rise? Nobody is presently in a position to answer this question with absolute certainty. What is certain tough is the fact that – like with a tower – with every floor the liability and the intensity of a setback rise. At present, we don’t assume that share indices are massively overpriced as the prior year 2018 had been bad. Though, we see some indicators (such as a stronger CHF, a larger demand for shares in the healthcare sector, slower demand for shares in the technology sector as well as an increased demand for gold) which could prefigure a correction in the short term.

Hence, we have already taken advantage of the highest value of the share indices in order to achieve some realized profits and thus reduce the respective risks. Besides, we have – depending on the portfolio strategy – built up positions benefiting from a drop in the stockmarket which will have a stabilising impact on the portfolio.

In the medium term, a further slowdown of the issues surrounding the trade dispute between the US and China, but also the cheap money from the central banks, should ensure a positive momentum.
On the other side, the debt burden in Europe, the unsolved Brexit and the concern for a further weakening global economy remain a cool headwind for investors. Die US presidential elections in 2020 will also keep the investors busy. Also not to underestimate is the probability that the European central bank is to follow the Swedish one and thus draw a line under the negative interest era.

In the fixed income sector, the new decade could also prove as a difficult start for the investors. In case the European central bank should increase the short-term interest rates, the medium- and long-term interest rates are also to rise and thus put pressure on the bonds prices. It could also then be expected that the Swiss National Bank should follow the course of action of both Sweden and the European Central Bank.

For the time being, we thus recommend to keep on investing rather on the short-term as far as the bonds are concerned. Alternative forms of investments outside the events on the stock exchange with steady coupons and shorter maturity date (such as private debt or factoring) could be an ideal addition to the securities account.

Likely, in the short-term, the CHF will continue to be «fixed» by the SNB against both the EUR and the USD. To know if and when this is to change is difficult to predict. Though, we see presently little potential for the EUR/CHF and USD/CHF exchange rate. Thanks to a possible interest rate move by the European central bank, the EUR should rather increase in price against the USD in the short-term.

How long the trend of rising commodity prices is to continue is difficult to assess. On the contrary, gold could continue to profit from the major uncertainties on the stock markets. Then again, increasing interest rates are normally no price boosters for the yellow precious metal.