Analytics, Banks, Estonia, Financial Services

International Internet Magazine. Baltic States news & analytics Thursday, 25.04.2019, 21:38

Estonia: SEB increases low-risk positions in anticipation of stock market decline

BC, Tallinn, 05.12.2018.Print version
SEB anticipates an increase in volatility on the financial markets due to deceleration of economic growth and has thus increased the share of low-risk assets in its portfolios, reproted LETA/BNS.

"Following the negative shift on the stock market in October, SEB increased the risk in all its portfolios from a neutral position to a slight overweight in shares. That is first and foremost due to the continued economic growth and more reasonable share prices following the decline," private banking strategist at SEB Peeter Koppel was quoted in a press release as saying.

In SEB's estimation, the peak of economic growth as well as that of the increase in businesses' profits has been reached by now. In 2019, too, a deceleration in businesses' profits is anticipated to continue and the same applies for GDP growth. Economic growth is predicted to decelerate further in 2020, recession, however, is not yet on the cards. 

"We continue to be cautiously optimistic, but as we are in the last phase of the economic cycle, it is reasonable to expect increased volatility on the market. In a later phase of the cycle, uncertainty always increases and the year 2018 is a good example of it. Economic growth as well as increase in businesses' profits has been strong, risk tolerance and income from markets, however, have been low. The market is still susceptible to the unexpected and we are prepared for a large fluctuation in investors' appetite for risk," Fredrik Oberg, CIO of investment strategy at SEB private banking, said.

Kopper said that the market situation is somewhat problematic in a tactical sense as visibility is poor and the number of negative factors exceeds that of positive ones. Cautious optimism on a strategic level, however, has paid off so far.

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