OUTLOOK 2020: equities, bonds, real estate

FRANKFURT (dpa-AFX) – Equity investors should have reason to be happy again in 2020: With interest rates set to stay very low, lots of money will likely continue to flow to global stock markets. Another bullish year like 2019 seems unlikely – after all, international trade disputes are yet to be resolved and there is a risk of another political hiccup if the EU-Britain free trade agreement is to be reached. now be negotiated quickly. Given the expected price turbulence, it is worth looking at the bond or real estate market. An overview of the different asset classes.

EQUITIES: After the strong surge in European stock markets in 2019, the stock market air on this side of the Atlantic has become scarce. But when in doubt, central banks should be ready with cheap money to help the economy. Nevertheless, clouds could appear on the stock markets during the year. The US presidential election is a major source of uncertainty. Still, the chances of a continuation of the nearly eleven-year recovery on Wall Street are not bad. “A bull cycle doesn’t die just because it’s old,” says strategist Mislav Matejka of JPMorgan bank, referring to the US economy, which has been a tailwind to the stock market for years. Strong economic growth in many countries and the flow of money from central banks will likely lead to price gains on Asian stock exchanges. However huge the continent is, the opportunities and risks vary from region to region. The big unknown in the background is the US President’s trade policy.

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GOVERNMENT BONDS: In an environment of rising stock prices, government bonds viewed as safe often struggle. The low yields made these papers less attractive as “portfolio ballast,” commented investment experts at asset manager Blackrock. Still, experts prefer still relatively high yielding US government bonds to bonds from other countries. According to experts, special bonds with inflation protection or those with short maturities are also worth a look to protect the portfolio – in case the signs change in the markets.

CORPORATE BONDS: Experts from private bank Berenberg also recommend short-term exposure to the bond market. “Anyone looking to generate positive returns from bonds should be moving towards risk premiums in 2020 instead of looking for the long term.” At least at the start of the year, additions to subordinated and high yield corporate bonds would therefore be an option. In addition, emerging markets will remain an attractive segment, although it will be more important than in the past to take a closer look and strictly differentiate between acceptable and avoidable risks.

REAL ESTATE: For Landesbank BayernLB analyst Sebastian Schnejdar, the overall positive effect of the low long-term interest rate outweighs the negative effects of the deteriorating economy on the German residential real estate market and commercial: “The rise in prices on the real estate market is not yet over and will continue in the year Continue in 2020.” In particular, the demand for residential real estate in German metropolitan areas remains high. The risks mainly exist. with real estate developers and project developers due to the sharp rise in the prices of land for construction and buildings as well as the growing and difficult to assess regulation of housing companies, as shown by the rent ceiling and the debate on l expropriation in Berlin and other metropolitan areas.

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REAL ESTATE FUND: The performance of open real estate funds in Germany will be driven by the continued appreciation of real estate, says analyst Stefan Mitropoulos of Landesbank Helaba. However, these could be somewhat lower in 2020 due to the price levels reached and recent economic weakness. As in the previous year, non-interest on liquid funds will likely reduce returns.

FOREIGNERS: With Boris Johnson’s clear victory in the UK parliamentary elections, the Gordian knot appears to have been broken in Brexit for now, and the economic engine in Europe is working pretty well overall. Experts say the euro could catch up against the US dollar in 2020. “The growth differential in favor of the United States will continue to exist, but it is likely to narrow in view of the future,” says Chris-Oliver Schickentanz, Chief Investment Strategist at Commerzbank. Because Europe appears to have passed through the valley of tears and is set to grow faster again in 2020, while the US economy – from a significantly higher base – is losing momentum. The same goes for the interest rate advantage, which has narrowed considerably following the three rate cuts by the US Federal Reserve.

RAW MATERIALS: Experts believe that gold has the potential for further increases in value in 2020, mainly due to extremely low interest rates. Precious metals trader Alexander Zumpfe of trading firm Hanau Heraeus also refers to uncertainty over further economic development, concerns over the consequences of Brexit and fear of trade disputes. “The environment for gold remains positive.” Jens Ehrhardt, head of asset manager DJE Kapital AG, is a bit more cautious: the outlook for precious metals, especially gold and palladium, continued to look positive in the long term, even though an overbought situation has recently prevailed with too much optimism. However, due to the sharp decline in gold purchases in China and the main gold buyer India, the rally in the price of gold could drag on ./la/bek/fba
— By Lutz Alexander, dpa-AFX —

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