THE POCKET GUIDE TO 2013
THE WORST HAS PASSED IN EUROPE
BofA, UBS, Barclays agreed that the area had on the whole seen the worst and was growing safer as turmoil stagnated. Morgan Stanley recently lifted their underweight position and increased exposure to European equities.
ING expects troubles to shift to Italy and France.
CHINA POISED FOR GROWTH
ING cautiously threw in their support:
The recent transition in leadership heightens the chance that growth will be sustained, though it may be more precarious going forward. ING
EQUITIES LOOK RIPE
INVESTMENT GRADE DEBT > GOVT BONDS
Investors should refrain from reaching for yield by moving lower in credit quality than is appropriate for their risk tolerance, Wells Fargo said. Investors focused on income should give significant consideration to income investment vehicles outside of the traditional fixed-income universe, such as dividend equity solutions.
The only asset class Wells Fargo was overweight in was investment grade bonds (ie Treasuries and mortgage-backed securities)
BofA Merrill Lynch stood out as expecting government bonds yields to rise modestly to 2.0 in the U.S., 2.5 in the U.K. and 1.5 in Germany.
THE "LIQUID" INVESTMENT
Scarcity in major economies such as China, India and Indonesia coupled with urbanization and climate change could make this resource particularly valuable based on the benchmark of the ISE Water Index, Morgan Stanley said. Returns were at 27.8% on this index in 2012.
CAPTURING INCREASED FOOD DEMAND
Investors looking to exploit the worlds potential long-term growth in food demand should take a broadly diversified commodity exposure that includes agricultural, industrial and precious metal groups, Wells Fargo said.
MIXED REVIEWS FOR GOLD
Barclays warns to beware of reflation risks, but be ready to buy on price dips toward the 200-day moving average. Wells Fargo says it should do well if the Eurozone continues to hold together.
Either way, avoid aluminum and copper where fundamentals look weakest, Barclays said.