August 2008
Background
Further evidence of widespread economic weakness in the US, UK and Europe unequivocally
confirms recessionary conditions evolving in the developed world. With investment, housing
and banking activity sharply declining, corporate news flow has become increasingly bearish.
Lack of earnings visibility have left financial markets hostage to uncertainty and volatile
changes in sentiment.
Performance
Global equity markets declined further over the month. Financial stocks were hardest hit,
accounting for significant declines in Australia, the UK and Ireland. The United States, which
was unchanged over the period, proved to be one of the best performing markets.
Activity
Trading activity was fairly muted over the month. One percent was added to equity
exposure from cash through adding to existing positions in QBE Insurance, ORIX and
Takeda Pharmaceutical.
Outlook
From an economic perspective the outlook for the developed world looks grim. Wealth
destruction through financial de-leveraging and property devaluation will have huge negative
consequences for many years to come. However the widespread decline in financial markets
is beginning to present interesting investment opportunities for long term investors, so we
remain vigilant to cautiously committing new capital when deemed appropriate to do so.
Source: Monthly Factsheet Aberdeen Asset Managers Limited