European equities are under pressure in early trading after disappointing economic data out of China, both industrial output and retail sales posted lower than expected readings.

Especially worrying are Chinese industrial output figures missing estimates by a wide margin indicating that the economic slowdown in Europe might be having a much bigger impact on China’s economy than originally expected with some seeing chances for a hard landing increasing substantially. On a positive note Chinese inflation data came in again lower than expected and well below the 4% target, this combined with the weak economic figures seen today should bring forward any planned cuts in interest rates and lowering of the reserve rates, possibly even spurring a growth program implement by the Chinese government. Additionally news from JPMorgan after yesterday’s US close announcing that they have suffered a trading loss of several Billion USD is filtering through to other banks pressuring the entire sector not only in the US but in Europe too.

On the last day of the trading week main focus will continue to remain on Greece and efforts to form a new coalition government.

However even if the goal will be achieved to form a new coalition government and therefore Greece being able to avoid having to call again new election this might not necessarily be enough, instead a clear commitment to agreed austerity measures of all parties involved in the new government will be needed in order to remove most of the uncertainty surrounding Greece and their future in the Euro.

Despite uncertainty surrounding Greece at the moment the Italian T-Bill auctions scheduled for mid morning are expected to go alright, with interest rates probably continue to creep upwards.

The steel industry will increase the assistance offered to value added carbon steel exporters by 28.2% from R135 to R173 per tonne with back dating effect on exports as from 1 February 2012, to provide exporters in this sector to compete more effectively in global markets.

The SA Iron and Steel Institute  established  the COSM Fund in June 1972 which saw the primary carbon steel producers of South Africa getting together to enhance the downstream steel processing industry’s export potential. The Fund has contributed more than R 246 million in assistance during the past five years to exporters who have added at least 20% value or more to primary steel products.

The increase in export assistance has a threefold aim 1) to stimulate the export market in the current economic climate, 2) to revive exporters that are currently not competitive in the export market, and 3) to assist in creating and/or maintaining jobs in the sector.

SAISI, whose membership comprises the country’s primary steel producers, administers the scheme through the Committee of Secondary Manufacture (COSM) Fund. The COSM Fund is fully funded by SAISI’s members and is completely independent of rebates offered to the value added steel industry by SAISI’s individual members 

The Fund promotes the development of the value added steel processing industry in South Africa in order to expand the market for locally produced primary steel products.

This enhances the country’s foreign currency earnings and increases employment opportunities in general, while developing the value added steel industry’s export potential. During the past five years, the COSM Fund has assisted more than 140 registered value added carbon steel product exporters who have exported more than  1,8 million net tonnes of steel and have earned more than R 103 billion for South Africa.

Johann Nel, Acting Secretary General of SAISI

Increasing their standard of living at the same rate or faster than their income is one of the key reasons why more than half of South Africans are in serious debt, with millions of people being unable to save sufficiently for retirement.

Unfortunately for many people, an increase in income is usually accompanied by an even bigger increase in spending.      While this is often put down to human nature, it is a reaction that, if not carefully controlled, could lead to a dangerous financial position very quickly.

Often, people whose incomes have recently risen, tend to buy things that they don’t need or can’t really afford once all the additional costs are considered.   It’s the mentality of ‘rewarding oneself’ that usually motivates people to spend more than they would usually – for example, upgrading to a new car when their current car is in perfectly good condition.

South Africans should take a page out of pop-star Lady Gaga’s book when it comes to keeping spending under control, even when income is rising.

Gaga reportedly still lives in a one-bedroom flat she has had in New York since before she became famous and continues to spend frugally on her credit cards.

This does not necessarily mean that you should not upgrade your standard of living at all as your income increases, but it is a good example of the mind-set that this does not need to be an automatic reaction.

It’s crucial for people whose income has increased recently to carefully consider the impact of inflation on their monthly expenses before increasing their spending patterns. With inflation currently at 6%, it means that on average it costs 6% more just to maintain the same standard of living than it would have a year ago.

People who belong to a company retirement fund usually contribute a percentage of their salary to the scheme, which means their contributions each month increases along with their salaries. However, people who save through unit trusts or other savings products usually contribute a fixed Rand amount to these investments, which are often not adjusted in line with their income levels. This results in a smaller percentage of monthly income being saved, resulting in huge shortfalls at retirement age.

When people get seriously sick or require surgery, they will not self-medicate or operate on themselves – they will consult a doctor. In the same sense, when you are dealing with important investment and savings decisions, you need to seek assistance from professionals who can help you make the right choices.

Anil Jugmohan, CFA Investment Analyst at Nedgroup Investments.

A mismatch in skills continues to hamper both Australian and South African industries. While both countries are predicting the shedding of many jobs this year, many industries are looking abroad to fill positions where skills are lacking.

Australia and South Africa are both exporting and importing talent between the two countries to combat shortages in industries such as IT, mining, construction and renewable energy. “Engineering and IT is where Australia and SA Manpower have strong links and where we are currently supplying staff – especially in Queensland and Western Australia,” says Maxeen Bremer of Manpower South Africa.

However, according to Australia’s employment outlook for 2012 employment looks more stable compared to South Africa and forecasts that 23% of employers are planning to increase hiring while only 10% are looking at cutting back. South Africa’s outlook for Q2 2012 is that 9% of employers are looking to decrease hiring with the same figure looking to increase employment. When seasonally adjusted,

Australia’s net outlook is still positive at 13% compared to South Africa’s -2% but South Africa has only dropped 5% year on year compared to Australia’s drop of 9%.

The on-going skills shortage, which is being felt around the world, is also contributing to the ‘brain drain’ from South Africa. Much of the emigration of professionals felt by South Africa is due to a need for skilled individuals in other countries, particularly Australia and the UK. The demand for skilled labourers in the UK, US, Canada, New Zealand, and Australia has led to active recruitment programs by those countries in South Africa. These countries accounted for 75% (by volume) of overseas placements of native South Africans.

Australians and South Africans live in very similar climatic conditions making the adaption to a new living place easier to adapt to and work in. Similar interests such as sport and food means that a healthy work/life balance is easy to maintain, an important aspect to ensuring that employees remain positive and motivated. Many individuals who move to regions with vastly different climates often suffer from negative effects such as depression, specifically for those moving from a predominantly warm and sunny climate such as South Africa to a colder one such as England.

However the increased economic sluggishness is meaning leaner pickings for many positions in Australia, while others are finding skills shortfalls. This is resulting in less demand and contributing to some of the return traffic of expats from Australia to South Africa.

Most countries are expecting relatively positive results for the 2^nd quarter, including countries that have close economic ties with South Africa. Which means that South Africa should in fact be relatively positive in relation to it close tied partners.

Australia is expecting employment to rise by 13% in the second quarter of 2012. Despite Australians also feeling like times are tough regarding employment, plenty of employers are still hiring and skills shortages continue to bite. The enthusiasm seen at the end of the downturn has been tempered since mid-last-year, as the Eurozone crisis and a sluggish U.S. recovery created uncertainty. In addition, the decline in exports and strong Australian dollar is hurting industrial employers and impacting their ability to hire.

Australia experienced the same effects as South Africa on their manufacturing sector where for the third consecutive quarter, hiring expectations were weakest among employers in the industry sector at +4%. However their Net Employment Outlook for Wholesale and Retail Trade was almost half the national average, at +7%, Whereas South Africa’s Wholesale and Retail Trade was one of the best performing industries with regards to employment forecasts.

By contrast, employer optimism in the Transportation & Utilities sector for Australia grew stronger, jumping 7 percentage points to +19%, and making it the only industry to record year-on-year growth where it declined by 3 percentage points in South Africa. The Mining & Construction sector Outlook rose 3 percentage points in both Australia and South Africa to +23% and +8% respectively, showing improvement in both countries’ need for skills in the industry.

It’s an unusual situation where countries around the world are experiencing skills shortages, but at the same time are cutting back in many sectors. This is resulting in many expatriates returning home due to the job cuts but many more being in demand not only in their home country but in many countries simultaneously.

“Employers in hot industries, who continue to struggle with skills shortages, may need to reassess their job criteria and look for a ‘teachable fit’ – that is, candidates who meet most criteria but need further training in other areas. This is particularly relevant for candidates coming from other industries, who have the fundamental skills but require specific training to fill the gaps.

Job seekers should also take heart from these results – as long as they’re open to changing direction, there are plenty of flourishing industry sectors and job families, especially if they are willing to learn new skills and adapt to a different environment,” concludes Lyndy Boland, acting Managing Director of Manpower Group South Africa.

These are the view of Justin Hayward.

In recent months risk assets in general have performed strongly, yet as Deutsche Bank notes share prices for Australian resource stocks have been relatively subdued. This reflects concerns about the growth outlook for China, but these concerns appear overdone in Deutsche’s view. An overweight call on the sector is retained.

Such a positive view is supported by key indicators of commodities demand being stronger than they appear. As Deutsche notes, while indicators such as global steel production and Chinese Industrial Production are showing few signs of life, these indicators tend to lag at turning points.

The data suggest measures such as Chinese steel production actually bottomed late last year and are now improving. As well, Deutsche’s analysis suggests Chinese property is on track for a soft landing, especially given lower inflation should allow for further policy easing in China this year.

Commodities demand therefore appears to be strengthening rather than weakening, meaning it is only a matter of time until year-on-year growth rates turn higher. Once this improving demand trend becomes more evident, Deutsche expects mining share prices will outperform the market, this given mining share prices appear priced for a worse outcome than should actually occur.

Ric Deverell, Global Head of Commodities Research from Credit Suisse who presented at Commodities Week 2011 Middle East’s also believes commodity demand is on the up, and that mining shares could see a recovery from the initial slow start to 2012.

In a depressed investment environment, the use of reliable income streams when constructing a portfolio remains prudent

Inflation is set to continue rising in 2012 while economic growth is slowing. In this environment, meaningful capital appreciation will be hard to come by, further emphasising the need to use appropriately priced and reliable income streams when constructing a portfolio to plan for income today or income in the future.

The inflation rate influences interest rates and forms the benchmark for real returns. Consumer spending is paramount for corporate profitability and growing dividends. Consequently, these are two of the most important macro-economic variables to consider when determining an appropriate price to pay for an income stream.

2011 was characterised by rising inflation and a fatigued consumer. The combination of rising inflation and slowing household consumption, as well as on-going uncertainties surrounding the Eurozone sovereign debt crisis resulted in volatile markets with prices ending the year at similar levels to where they started. Markets were volatile throughout 2011 with no price appreciation: positive total return was purely a function of income.

In 2012 the challenges remain: austerity measures will be a drag on global economic growth for years to come

2012 is set to be another trying year for investors. Over-indebtedness of many first world economies has forced authorities in these regions to reduce fiscal deficits by lowering spending and increasing taxes (austerity measures). This cutback in spending is expected to be a drag on global economic growth for many years to come. A debt-to-GDP ratio of 60% is often noted as a prudent limit for developed countries and the table below highlights just how elevated the government debt levels are in first world economies:

Source: OECD

One third of SA’s exports go to the Eurozone and the US

South Africa will not be immune to first world developments as it relies on developed markets for international trade as demonstrated in the table below:

Source: Department of Trade and Industry

An additional headwind for SA economic growth is a consumer who remains over-indebted and under-saved. This, combined with declining real house prices and a high level of unemployment, has weighed on consumer confidence throughout 2011.

Chart 1: Key Consumer Statistics as at December 2011

Source: I-Net

The problem with too much debt

With the availability of debt, accumulated savings are no longer a prerequisite for consumption. Debt is used by consumers to bring forward the consumption of big ticket items such as housing, household appliances and motor vehicles.

Household consumption makes up approximately 60% of South Africa’s Gross Domestic Expenditure (GDE) and is the biggest driver of GDP growth. Thus, whilst households are accumulating debt to fund consumption, an economy will experience strong economic growth.

However, an unfortunate trade-off exists. As household debt accumulates, more and more future income is diverted away from consumption as it must be used to service and payback debt. Thus when debt levels reach a ceiling, consumption slows thus detracting from GDP growth.

Local inflation is set to continue rising which, together with low growth, suggests SA income streams relative to first world alternatives are expensive

Despite a slowing economy, local inflation is set to continue rising as SA is yet to feel the full impact of a weaker rand. Almost one third of South Africa’s GDE consists of imports, thus the rand’s 22% depreciation against the US dollar during 2011 will exert significant upward pressure on inflation in the months ahead as import costs rise.

An environment characterised by rising inflation and subdued dividend growth suggests that the current low dividend yields of many South African asset classes cannot be justified. Internationally, first world markets are offering investors substantially better value.

Where to invest in 2012?

SA Bonds – inflation-linked bonds are preferred

We continue to favour inflation-linked bonds over fixed interest bonds due to their relatively attractive real yields and inflation-hedged income. Based on our current medium term inflation estimate of at least 7% p.a., the real return offered by fixed interest bonds is about 1% which is less attractive than inflation-linked bonds which are currently guaranteeing investors a real return of 2.2%.

SA Listed Property – below average yields and below average income growth

Administered prices continue to escalate well ahead of inflation and their impact on property expenses is starting to significantly subdue the income growth prospects of SA listed property.

As a result of subdued property distribution growth prospects, investors should be compensated with higher yields than are currently available in the market.

SA Money Market Instruments – a parking bay to preserve capital

Despite rising inflation, cash interest rates during 2011 remained unchanged. The outlook for interest rates for the year ahead is uncertain as it remains unclear to what extent the governor of the Reserve Bank, Gill Marcus, will favour stimulating economic growth over combating inflation.

SA Listed Equities – low dividend yields

Although dividends generated by South African companies increased by approximately 31% during the course of 2011, the average dividend growth since 2008 has been approximately -1%.

This recovery in dividends, coupled with minimal share price appreciation has resulted in the dividend yields of South African equities increasing from 2.2% at the beginning of 2011 to 2.9% today. Despite this, local equity yields in general remain well below their long term historic averages. To justify current valuations, South African companies must continue to produce above average dividend growth, but this appears highly unlikely given slowing global economic growth and a strained SA consumer.

International markets

International real estate continues to offer investors fair yields with inflation-hedged income growth prospects. Due to historically low interest rates, the probability of any real return from an investment in international fixed interest bonds is unlikely.

First world large cap stocks continue to offer good value. Dividend yields of some of the largest and most recognisable companies in the world remain well above their long term historic averages, as well as being higher than international bond yields, cash interest rates and inflation. It should be noted that these first world large cap equities operate globally and derive a substantial portion of their revenues from emerging markets as demonstrated in the table below:

First World Large Cap Companies with Emerging Market Exposure (2011)

Source: Company Financials

Conclusion

In a time of heightened market volatility where the outlook for investments appears discouraging, it remains possible for investors to obtain a high degree of certainty in planning for income today or income in the future. Investors should seek opportunities which expose them to consistent and reliable income streams, enabling them to accumulate and grow capital in preparation for retirement and preserve capital during their retired years.

Marriott Asset Management

For many trustees of retirement funds, offshore investing is becoming an integral component of their investment strategies. This trend is increasing following the announcement that National Treasury has increased funds’ foreign assets limit from 20% to 25%, with a further 5% being available for investment in Africa.

The amendments to Regulation 28 of the Pension Funds Act now allows for collective investment schemes asset managers and life companies to invest up to 35% of their total assets offshore.

These developments have made it even more critical for consultants and trustees to consider the fundamental motives for members’ increasing offshore investment exposures. Furthermore, it is crucial that they enable themselves to make informed international investment decisions on behalf of their members.

Choosing a strategy for offshore investing is one of the most important decisions that trustees of retirement funds and members will face.

There are many things that both trustees and their consultants should consider – apart from diversification and risk reduction. These include how much to invest offshore, asset allocations, strategy relating to how each asset class in the portfolio is to be managed and finally, manager selection.

Selecting a manager to manage an offshore portfolio presents a few more challenges than manager selection for local portfolios. There are essentially two avenues through which foreign exposure can be gained.

1. via local managers with global capabilities, or
2. via offshore managers who manage global mandates from their foreign offices.

In the current South African market, simply having access to a universe of global managers and their asset capabilities is no longer sufficient for informed decision-making.  Trustees and consultants need access to in-depth information about individual managers in order to select a manager who can meet members’ offshore investment objectives.

Offshore exposure within an investment strategy serves to offer diversification benefits over the long term. By spreading investments across different geographic regions and currencies, offshore asset classes effectively give local investors the opportunity to diversify investment portfolios and reduce investment risk.

On a strategic long-term basis,  my view is that bonds are the most effective assets for diversification among offshore assets, followed by cash. This is because these asset classes move together with foreign currency to the extent that when local markets are going down, these assets will move in the opposite direction, thereby cushioning local investors in local currency terms.

by Windall Bekker, Head of Investment Consulting at OMAC Actuaries & Consultants

Another month, another acronym. January saw the announcement of an unlimited LTRO (“long‐term refinancing operation”) by the ECB (“European Central Bank”). The LTRO has allowed distressed banks to borrow 3 year money from the ECB at very low interest rates, thereby providing a substantial boost of liquidity to troublesome balance sheets and – for the moment at least – deferring the possibility of a run on the banks. This was a smart move, equal in effect to the implementation of TARP (“Troubled Asset Relief Programme”) in 2008 in the US aimed at bailing out those financial institutions that had been savaged by the sub‐prime crisis. Coupled with a continuation of above expectation performance by the US economy and a reasonable set of corporate results, the LTRO changed the investor mindset to one of greater risk appetite: where December disappointed, January surprised on the upside (see the return for Greece below).

12 Months

With an improvement in sentiment, the US$ was on the back foot for the greater part of the month. Whilst the recovery in the Rand was fairly muted (+4%), the currency impact on some of the markets shown in the upper table was significant. Thus a positive swing of 9% by the Indian Rupee against the US$ had a sizeable impact on the total return of the Indian share market. With the investor view of the world decidedly rosier, there was a strong swing out of the defensive sectors that dominated attention and returns last year into cyclically oriented areas such as Materials and Diversified Financials.

The sustainability of the current mood still depends largely on resolution of the European crisis. There are substantial debt rollovers to face within the next few months and Greece remains an oozing sore that refuses to heal. The LTRO is a good start though.

• At least one long outstanding question was answered in the last month: when would the All Share regain its previous high? The fact that this would occur in the first month of the new year was definitely not on anyone’s radar screen at the end of last year. It took a clever European financing package early in January to get the party back on track.

The upper graph alongside illustrates the profiles of the South African bear markets over the past three decades. The performances are indexed to 100 at the trough of the All Share Index, with the profile of each line indicating the fall from the previous peak to its low and the subsequent retracement back to that peak. The X‐axis indicates the time in months that each cycle took to reach its low and the time that it took to regain its previous high. The table below

the graph puts numbers to the moves. It is interesting to note the following: firstly, whilst the bear markets of ’69, ’74 and ’80 took a lot longer to bottom out, their annualized falls were not as vicious as those of ’87, ’98 and the most recent of ’08; secondly, the recovery periods of the earlier bear markets of ’69 and ’74 almost matched the time it took to reach the bottom, stride‐for‐stride. The more recent bear markets were typified by a far shorter time to the bottom and a longer grind back to the top. Thirdly, the ‘08 bear was particularly vicious. Whilst it matched the collapses of ’87 and ’98 in terms of the (short) period that it took to hit rock bottom, the recovery this time around took twice as long. In fact, clawing back that which was lost in ’08 – ’12 took longer than was the case in the aftermath of the ’69 and ’74 crashes. Whatever it takes.

• Global politics has become increasingly relevant over the past few years as voters in certain regions have indicated a resistance to letting the normal 4‐year cycle that an incumbent is in power, to run its course. Abundant policy mistakes have heightened the risk of political tenure and decision‐making. This year sees a number of crucial elections taking place, the most important of which will be in the United States, France, Russia and China. These countries comprise 40% of global GDP, and are key players in the political arena. Other elections to watch will be those of Greece, Egypt, Venezuela and Korea. Share markets have reacted favourably to elections in the past – especially in the US ‐ but with policy maneuverability constrained, it might not happen this time around.

By Matt Brenzel of Cadiz

Despite fears of another recessionary dip, worldwide manufacturing continues to perform well, recently posting strong quarterly gains in major economies.

South Africa proved its pliability and manufacturing potential by competing on this global platform. This continued persistence in global manufacturing indicates that a worldwide downturn in industrial production will hold its position dependent on the outcome of the Euro-zone crisis.

A major crisis undermines local exports as Europe purchases approximately a third of our manufacturing exports. Added to this, the uncertain global environment will possibly put some strain on local company earnings and job security.

Manufacturing accounts for a small proportion of GDP in most Sub-Saharan African countries. Produced goods currently constitutes only 14% of Africa’s exports. Even in South Africa, the continent’s industrial powerhouse, manufacturing has declined significantly since its peak in 1981. However, it remains the second largest sector, contributing over 15% of total output and consists of 13% non-farming jobs.

Nevertheless we are encouraged by the global industrial production data out early in 2012 and generally more constructive data out of the US and China. This hopefully suggests that by the middle of 2012 South Africa’s manufacturing sector will be better positioned to assist the other lagging local economic sectors to pull themselves out of recession and marginalise the divergence in performance. For example, cement production is up 14,4% while vehicle production was down 12,6% year-on-year.

The recent increased maintenance in the petroleum industry, which has distorted data, has exaggerated weaknesses in the manufacturing sector. It is better to look at the trend cycle index for manufacturing, which shows that although manufacturing has recovered from the 2008/2009 severe recession, it has being stagnating for the past year and remains under some pressure.

Some of the challenges facing manufacturing in Africa include skills shortages, rigid labour laws, political instability and inadequate power supply. The local energy supplier Eskom has warned mining and manufacturers alike that it is functioning at an extremely low reserve margin and power cuts are imminent. Also putting a damper on growth in this sector is below-standard mining performance as well as agricultural performance and low construction activity.

South Africa has traditionally been known to export unrefined commodities, however the minister of trade and industry recently stated that a possible solution to increase production figures would be for South Africa to, in-stead of exporting mineral sands such as titanium sand sold for $440 a ton at the end of 2011, increase processing into titanium sponge, which would fetch $4 000 a ton and further refining it to an alloy, used in the aircraft industry gaining up to $100 000 a ton. This seemingly small addition to the refining process will have immense benefits if extended into other commodities as well.

Although progressing at a tender pace, manufacturing can be seen as a stable industry in an otherwise uncertain economy.

By George Marais, information analyst, Coface South Africa

With the stock market eking out meager gains, cash offering historically below average returns and inflation ending the year outside the 3% to 6% band, 2011 presented quite a disappointing year for most investors. The question now remains: what does 2012 have in store?

While the recent stock market rally may be cause for cautious celebration, the reality remains that, at current trading levels, the market has really only returned to the levels of three years ago. With the global economy still depressed and deep-seated structural issues still prevailing, it’s difficult to predict where future earnings growth may be generated.

It is als  worth considering the fact that South African equities could underperform developed market equities in the foreseeable future. While this has only happened twice in the last 11 calendar years (in 2008 and 2011), in both instances the underperformance was driven by concerns around global growth. The South African economy is sensitive to the poor headlines in Europe, and not as attractively priced on valuation grounds.

Due to the fact that the Monetary Policy Committee (MPC) left interest rates unchanged at 5.5% at its MPC meeting in January cash rates are likely to remain at multi-decade lows throughout 2012.

In 2011, an investment in cash not only lost its local purchasing power (i.e. the return from cash was insufficient to compensate investors for inflation), but it also lost international purchasing power on the back of a significantly weaker rand. With domestic growth under pressure and the South African Reserve Bank reluctant to hike interest rates in the near future, the low rates currently prevailing are likely to remain for some time yet.

Most analysts are further expecting inflation to remain outside the 3%-6% band for most of 2012. In this respect, South Africa is different from much of the developed and emerging world, where inflation has already peaked. Higher local inflation will place both our currency and bond yields under pressure.

And it is not yet clear how the economic turmoil in Europe and the US will be resolved.

However, investors should also not ignore the opportunities in offshore markets. If investing offshore is too daunting to do alone, investors can take advantage of investing with a local manager who explicitly takes on offshore exposure themselves. These managers carefully weight up the volatility risk of investing offshore, especially when measured against a local benchmark.

Remaining in cash looks a bit like a a poor alternative, especially after taking inflation into account, it looks increasingly clear that cash rates both here and abroad will remain low for longer than initially anticipated.

Investors should also be realistic about their ability to trade opportunistically in these volatile markets, and be wary about deliberately positioning themselves in anticipation of any particular event.

Should markets move against such expectation, investors will have insufficient time to react appropriately and will bear the brunt of accompanying losses. Delegating this decision to a professional manager or multi-manager might make more sense.

Investing in these uncertain times can seem intimidating, even for sophisticated investors, but fortunately, local fund managers with the appropriate benchmarks are equally concerned with generating real returns from their investment portfolios.

Investors in such portfolios need to persist with their investment strategy in 2012 despite reading troubling headlines in the newspapers concerning the global economy. Given where 2011 left us, they also need to be realistic about the returns that can be generated from this point onward.

These are the views of PPS head of Research David Crosoer.