June 2009
Background
Despite some recent depressing data on housing activity, industrial production and personal
consumption in both the US and the UK, global equity markets maintained their upward
momentum over the past month. Stronger than expected consumer confidence provided the
catalyst for investors to increase equity market exposure in the hope that global economic
conditions are about to improve. Consequently a classic cyclical equity market rally ensued.
Performance
As risk aversion abated, economically cyclical companies in perceived higher growth regions
of the world continued to perform strongly over the month. Energy and commodity producers
in countries such as Brazil, China and Thailand recorded some extremely strong gains, closely
followed by emerging market Bank stocks and selective European financials. Following the
pattern since March, defensive consumer stocks and utilities lagged significantly.
Activity
Activity over the period was muted. Existing positions in Intesa Sanpaolo, Casino and Intel were
topped up on weakness. There were no sales over the month.
Outlook
The recent prevailing mood of unbridled optimism that has propelled global equity markets
into positive territory year to date seems content, for now to ignore the structural negative
imbalances that plague the US and the UK. Doubtless when reality is restored disappointment
will follow, but by staying focused on growth companies in growth regions of the world where
valuations are supportive, the outlook for returns from selective international companies still
remains compelling.
Source: Monthly Factsheet Aberdeen Asset Managers Limited