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Please be advised that future verbal and written communications from the bank may be in English only. These communications may include, but are not limited to, account agreements, statements and disclosures, changes in terms or fees; or any servicing of your account.

Por favor, tenga en cuenta que es posible que las comunicaciones futuras del banco, ya sean verbales o escritas, sean únicamente en inglés. Estas comunicaciones podrían incluir, entre otras, contratos de cuentas, estados de cuenta y divulgaciones, así como cambios en términos o cargos o cualquier tipo de servicio para su cuenta.

Informamos que as futuras comunicações do banco, verbais e escritas, podem estar disponíveis apenas em inglês. Essas comunicações podem incluir, entre outras, acordos de conta, extratos de conta e divulgações, alterações aos termos ou tarifas, ou qualquer tipo de serviço pertinente à sua conta.

仅此通知,本行即日起发出的口头及书面通信可能将只提供英文版本。这些通信可能包括但不限于账户协议,账单和通知,条款或费用变更;或任何为您账户提供的服务。

Please be advised that future verbal and written communications from the bank may be in English only. These communications may include, but are not limited to, account agreements, statements and disclosures, changes in terms or fees; or any servicing of your account.

Por favor, tenga en cuenta que es posible que las comunicaciones futuras del banco, ya sean verbales o escritas, sean únicamente en inglés. Estas comunicaciones podrían incluir, entre otras, contratos de cuentas, estados de cuenta y divulgaciones, así como cambios en términos o cargos o cualquier tipo de servicio para su cuenta.

Informamos que as futuras comunicações do banco, verbais e escritas, podem estar disponíveis apenas em inglês. Essas comunicações podem incluir, entre outras, acordos de conta, extratos de conta e divulgações, alterações aos termos ou tarifas, ou qualquer tipo de serviço pertinente à sua conta.

仅此通知,本行即日起发出的口头及书面通信可能将只提供英文版本。这些通信可能包括但不限于账户协议,账单和通知,条款或费用变更;或任何为您账户提供的服务。

Mounting-Brexit-and-trade-worries-slow-European-growth

Mounting Brexit and trade worries slow European growth

Jeffrey Sacks

By Jeffrey Sacks

Head - EMEA Investment Strategy

August 7, 2019Posted InEquities, Fixed Income and Investment Strategy

  • The UK’s equities and currency are discounting rising risks of both a ‘no deal’ Brexit and a snap general election. If concerns get overdone, late summer could provide good long-term buying opportunities. The market is reasonably valued with good dividend yield support. Sterling is well supported in real-exchange rate terms.
  • European economic growth is weakening. The European Central Bank is more dovish and will announce further stimulus measures in September.
  • Worsening trade outlook. The US-China trade war re-escalation has negative implications for Europe. Furthermore EU-US trade tensions are likely to intensify in the second half of 2019.
  • Portfolio construction should reflect the late-cycle conditions. Stay invested but diversified. Be very selective in fixed income corporate bonds; favor defensive equities over cyclicals, and value over growth.
  • Small underweight Europe ex-UK equities. Need for selectivity by country (prefer Switzerland), by sector (prefer technology and healthcare), and by theme (prefer high dividend yielders).
  • Underweight European sovereign bonds. Ten-year German Bund yield of  -0.49% is poor value regardless of potential renewed ECB buying support.
  • Underweight Europe and UK investment grade corporate bonds. Renewed central bank buying will drive yields to even more expensive levels. Yields can be enhanced through hedging back into USD.
  • Neutral high yield corporate bonds. The average yield of 3.5% is historically low, yet likely to go lower as investors reach for yield. There is decent coupon support, a low level of defaults, and only modest leverage.
  • EUR/USD is likely to keep drifting lower. This is due to a combination of further ECB easing, rising trade tensions, ‘no deal’ Brexit risk, and the unresolved Italian debt and bank sector challenges.

Click here to read Europe Strategy.