In the latest weekly report from Dovre Management writes Investment Director Stig Myrseth that the eighteen year old resultatresesjonen on the Oslo Stock Exchange and Wall Street is nearing its end. This, together with intensified monetary policy stimulus could lead to a new stock rally, according to investment director.
– The big question is whether the government bond market has sniffed out that a global recession is on the way and that the fall in interest rates reflect this. Do you think it, you should sell shares as results then further down. Better to lose a little on bonds than a lot of shares, writes Myrseth.
Investment Director rather careful against the decline in interest rates rather reflect stronger monetary stimulus after Brexit-shock. Here can be mentioned that the dramatic fall in interest rates in the periphery of the eurozone can hardly be explained by anything other than aggressive bond purchases by the ECB. Fearing market a global recession, should the Italian government bond yields have risen as a result of increased risk premiums. Instead, they plummeted.
– The reports for the second quarter are not anything to shout hurray over, but the important thing is that the arrows will no longer pointing in the wrong direction. With earnings multiples in the high end of the scale, I will not argue that stocks are cheap. A forward P / E of 14 on Oslo Børs not really scream purchase, turn Myrseth firm.
He suspects, however, that the new bottom records in interest rates will lead to increased appetite for equities and other risk assets ahead. The next twelve months will Norwegian listed companies on average give their owners a payout yield of 4.1 percent. In addition, the estimated price appreciation as a result of retained earnings.
– You should have dark glasses on to argue that ten-year government bonds with a 0.89 percent rate is a better location than shares by 4.1 percent dividend yield, at least in the long term, concludes Myrseth.
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