Draghi’s Actions Were More for the Economy: Shing

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June 6 (Bloomberg) –- BCS Asset Management Global Equity Fund Manager Edmund Shing discusses the ECB’s historic rate cuts and what they mean for the economy with Anna Edwards and Mark Barton on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

Welcome back to "countdown." i'm anna edwards.

I'm mark barton.

Bcs asset management admin shing is with us.

-- edmund shing is with us.

I would argue what mario draghi did yesterday is more important to the economy than people realize, less important for the markets because a lot of it had been anticipated.

I think what is hidden in the announcements is there has been a form of miniature qe because they said they would stop sterilizing asset for justice.

They sterilized purchases, in other words we bought the bonds, but we are withdrawing similar amounts from the markets, so that executive late -- that effectively puts it at zero.

Now they're leaving liquidity in the markets.

It is a form of limited qe.

I think the economic impact is important.

I think it reinforces the pace for european equities.

We were talking with a guest from munich and was suggesting equity markets are vulnerable because of the amount of complacency, lack of volatility, people are just believing too much the central banks have their back in the equity markets only go up.

Too much of a group think about that?

I don't think so.

I had this discussion with my boss in moscow, who echoed those thoughts come who said surely everybody in the same way, isn't that dangerous?

I said, hang on, the sentiment is indicated.

Either from a retail investor or the institutional investor, it's not extreme.

People are not that bullish.

Talking with another friend on the brokerage side, he said most of his clients are looking for a correction.

They have not sold yet come up they are waiting for the market to correct downward.

If that is the group think, i think what is more likely is the markets will be less comfortable and continue to go up because people expect that less than a down correction.

The internet retailer issuing a profit warning, this is a stock that we could use the word fall.

In two years it has gone up by seven times.

What are the perils of investing in stocks like aesop?

When you invest in these glamour stocks with a great story, it was a great story and that is what got investors aboard.

Institutional and retail.

The problem is always, that's always very well, what you always risk -- but you always risk a double whammy.

When there is a disappointment like they had yesterday with profit warning, sales, profit margins falling, which in itself is big, not only did the earnings get revised down, the market also falls.

In this case, it went from 70-something to 60-something.

It is growing at a strong rate, just not as much as investors had expected, and priced into the stock.

That's the problem.

We don't doubt it is still a good growth story.

The problem is will be rating recover.

It is at 50-something time, the market is at 14. it can still fall in awful long way before it's anywhere near the market rating.

Sometimes stock have more peel, then the likes of asos.

You want to look at stocks with boring criteria -- they are cheap.

The opposite of asos, low price to book.

The second is quality.

That means they are profitable, preferably with growing possibilities.

Third, you want a good price over the last 12 months.

Where the share prices have gone up in the earnings forecast is going up.

Fourth, companies that are not very volatile.

Bizarrely enough, the market

This text has been automatically generated. It may not be 100% accurate.


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