The global economy faces significant challenges

A great Article I just read from PSG Asset Managment giving a good summary of what is happening on the global front.
They are a good operation and have the ears close to the ground.

Enjoy !!


"The global economy faces significant challenges and, as a result, investment markets are likely to continue to be clouded by significant uncertainty and large swings in sentiment.


Europe and China are likely to be centre stage for a while and the scale of their issues and importance of their economies will see newsflow from these parts continuing to impact short term stock market direction. Whilst we have always acknowledged that the risks are significant, we continue to point out that central banks are actively countering this by increasing their monetary base.

Economic uncertainty usually creates good buying opportunities and it is our view that this time is no different.

During the course of the past twelve to eighteen months we have sold almost all of our large cap higher quality industrial compounders but have taken opportunity of our relative size advantage to build positions in some of our smaller cap high conviction names.

We also expect our conviction offshore stock picks to add significant value over the years ahead; not only have we managed to extend our investment universe but see materially better value in blue chip global companies than their SA peers.

April proved to be a very strange month for asset class performances globally, one where extreme divergences occurred in performances across regions, within regions and within sectors of the market.

On the Fixed Income front, we have held sizeable positions in inflation linkers which have performed superbly.

We have large stock piles of cash which we intend to deploy during serious bouts of negativism towards companies where intrinsic, long-term value exceeds the current share price. Having been underweight Resources for a while, we are beginning to feel that valuations are more compelling at present and we are building positions in this area on a very selective basis."

 "The PSG Angle is an electronic newsletter of  PSG Asset Management. "