[ad_1]
The characteristic of financial markets is that they are forward-thinking. So far this year, the stock market has been quick to “discount expected growth from future earnings,” the Bank of Åland writes in its latest Market Outlook.
“The high returns so far this year mean that much of this year’s potential in the equity market has already been realized, so we chose to adjust our exposure to equities a bit, but we still maintain a cautious overweight in the asset class, “writes the Bank of Åland.
Reduces the weight of the action
At the same time that the equity weight is lowered somewhat, the bank increases its investments in interest-bearing assets with short maturities. The reason is to be able to change the risk profile very quickly in the future.
Geographically, the allocation within equities remains unchanged, which means an overweight in the Nordics and Europe as well as an underweight in the US and emerging markets. At the same time, the bank is targeting lower-value stocks and cyclical companies.
“Fucked levels”
“The cyclical nature of the Nordic region benefits from the economic recovery, but the valuation has risen a bit”, is the motivation for the Nordic overweight.
In the case of Europe, the predominance of signs of recovery is justified, albeit from low levels.
The underweight to the US is due to the fact that rising equity prices have raised their valuations. At the same time, the element of growing companies is large and they are disadvantaged by higher bond yields.
In emerging markets, the economic recovery has been “cautious”, which in allocation terms leads the Bank of Åland to underweight.
