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UK’s growing appetite for corporate credit risk

Standard & Poor’s latest UK fixed income sector report suggested that managers were taking advantage of valuations to increase exposure to credit risk.

This was despite ongoing caution and concern over volatility caused by eurozone debt problems.

S&P fund analyst Kate Hollis said: “Widening credit spreads reflect the increased economic risks, although there is no consensus on whether Western economies are simply ­experiencing a mid-cycle blip or a serious downturn.

“Current valuations are generally regarded as an attractive longer-term buying opportunity as managers predicted continued sub-par growth rather than a double-dip recession.”

Emerging markets term ‘inconsistent and vague’

A report by US fixed income ­manager Standish Mellon Asset Management said that the term “emerging ­markets,” coined nearly 30 years ago, no longer did justice to a category of investments covering a wide range of asset classes and nations.

Traditional divisions between so-called developed and emerging markets were blurring, the report suggested, as some countries in the former category now displayed higher levels of risk and a more serious degradation of fundamentals than countries in the latter.

“We believe the term ‘emerging markets’ is a deficient investment concept as it is inconsistent and vague,” said Alexander Kozhemiakin, managing director and senior ­portfolio manager at Standish.

‘30 years of hurt’ await ­Norway equity investors

Robert Næss, CIO at Nordea Investment Management in Norway, said that equity investors there could find it hard to make any money at all from the local stock market over the next three decades.

The Bergen-based manager said that with inflation expectations of 2% and a nominal interest rate at 2%, it was difficult for investors to make a real rate of return over zero.

He added that the implied real rate over 30 years was now at 0.57%.

German tax evasion deal faces fresh challenges

A tax evasion deal signed between Germany and Switzerland was accused of being too lenient.

Ministers in Berlin endorsed their agreement with Switzerland to ­collect unpaid tax from Swiss accounts.

But it could be blocked in parliament after the SPD, Germany’s ­opposition party, rejected the plan for allowing identities of suspected tax evaders to remain ­anonymous.

It also claimed that ­Germany undertakes contractual ­obligations not to follow possible leads to ­criminal prosecutions.


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