News and Research Update

February 9, 2010, 8:00 PM - Data Source: UBS Wealth Management Research

Research in focus:

UBS global outlook

UBS global outlook is a flagship publication from UBS Wealth Management Research that provides a comprehensive assessment of the global macroeconomic outlook, key investment opportunities and important financial market risks. The report is published quarterly.

Daily Market News:

Economic News

Japan: Economy watchers see areas of improvement (February 8, 2010, 1:51 PM)
The Economy Watchers Index improved to 38.8 in January, up 3.4 points from December. In addition to the positive impact of government stimulus measures, exporters noted improving demand from Asia. While economic conditions remain severe, it appears likely that a double-dip recession will be avoided.

Taiwan: Strong export momentum remains (February 8, 2010, 1:50 PM)
Exports rose 75.8% y/y and 8.6% m/m in December out of a low-base effect and rising global demand. Exports to China remained strong with a 157.5% y/y growth rate. Imports grew 114.7% y/y due to the base effect and growing capital spending. Trade data are set to further improve in the coming months.

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Equity Markets EU

Daily European Equity Market Comment (February 9, 2010, 3:45 PM)
On Tuesday, European markets had a volatile trading session with Basic Resources and Banks amongst the best performing sectors in the broad-based DJ STOXX 600 index while Real Estate and Utilities were amongst the laggards. National Bank of Greece gained, after a four-day retreat, amid speculations that the European Union will agree to assist Greece in tackling its budget deficit. Swatch, world's biggest watch-maker, reported better-than-expected net income beating analyst estimates.

Daily European Equity Market Comment (February 8, 2010, 3:41 PM)
On Monday, European stocks swung between gains and losses as Banks and Insurance stocks led the decline, while Chemicals and Healthcare stocks advanced. A report showing that European investor confidence dropped for the first time in seven months added to the negative sentiments. Concerns over deficits in Greece, Portugal and Spain led to decline in banking stocks. Greek banks were the worst performers led by the country's largest bank, National Bank of Greece.

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Equity Markets Asia

Daily Asia-Pacific Market Comment (February 9, 2010, 11:52 AM)
On Tuesday, Asian markets traded higher with banking and commodity related stocks being the top performers. The MSCI Asia ex Japan index is now down 12.5% after touching its year highs on 11th January. Tightening measures adopted by China and India along with concerns over Greece's debt have led to the sharp reversal in markets. However, earning season was generally good with further upward revision in 2010 consensus EPS, which is up around 3% since the start of this year. EPS upgrades continue to be driven by cyclical with Technology and Materials leading the pack. In contrast, EPS revisions continue to lag in the defensive sectors led by earnings downgrade in Consumer Staples.

Daily Asia-Pacific Market Comment (February 8, 2010, 11:07 AM)
On Monday, Asian markets continue to slide on increasing concerns that the debt problems in European economies will hamper the global economic recovery. Asian markets are now down about 10% from its January high. Despite the recent market correction, we reiterate our view that over the next few years, emerging market asset classes especially high growth Asian markets will increasingly become a less risky investment area and that emerging economies as a whole will grow faster than developed countries. The recent correction is a powerful reminder that diversification remains a vital element of our recommendation. In our view, investors should take advantage of such bouts of high volatility to increase their exposure to emerging market assets.

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Forex Markets

Asia ex-Japan: Unmoved by shaky risk sentiment (February 9, 2010, 1:07 PM)
Despite the significant risk reduction in the past few weeks that benefited the USD and JPY against most currencies, the Asia ex-Japan currencies have managed to stay firm. The regional central banks are intervening to shore up the currencies. We only expect more appreciation in the second half.

JPY: Declining imports contribute to surplus (February 8, 2010, 12:42 PM)
The current account maintained a surplus, while the trade surplus increased in December. The exports recovery continued, whereas imports declined from a year ago. This reflects still weak domestic demand and underlies the strong deflationary pressure. We expect the support to the JPY to be muted.

EURUSD: Forecast change (February 5, 2010, 5:18 PM)
We lower our forecast for EURUSD to 1.35 in 3M, 1.42 in 6M and 1.53 in 12M (prev. 1.53, 1.57, 1.57). Europe's halfhearted way of handling the Greek debt situation hurts the confidence in the euro. For this reason the next months could even bring tests of the Dec 2009 lows of 1.24.

CHF: Forecast change (February 5, 2010, 5:12 PM)
We revise upwards our USDCHF forecast to 1.10, 1.06, 0.99 for three, six and twelve months (previously 0.97, 0.96, 0.97), as we expect the USD to continue to benefit from the fiscal troubles in the euro-zone. Our EURCHF forecasts remains unchanged at 1.48, 1.50, 1.52 for three, six and twelve months

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