Investors Search for Yield & Performance: Sullivan

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July 21 (Bloomberg) –- Espirito Santo Securities Head of Sales Trading Andrew Sullivan discusses investor sentiment, the impact of geopolitical tensions on the markets and Japan’s economic recovery with David Ingles, John Dawson, Angie Lau and Rishaad Salamat on Bloomberg Television’s “Asia Edge.” (Source: Bloomberg)

Angie is here.

Andrew sullivan, let's talk about the question you were asked most recently.

What is going to make money?


At the moment, everybody is looking at these markets.

They are all trading at near highs but at light volumes.

It is a stockpicking market.

There is not a lot of options.

You cannot afford to not be invested in markets at highs.

But everyone has one eye on the door.

The main attraction is highly liquid companies, good brand names, yield possible.

We are not seeing many people move into the small make cats where you might generally look for -- small-made cap -- small-m id caps where you might generally look for cash.

Everyone is expecting these highs to continue.


The selloffs are large because it is on light volumes.

It is not panic selling.

It's knee-jerk selling.

It is very short.

Missed someone realizes that it is down 10 spreads, there are other people waiting to buy it.

We are only seeing those little knee-jerk spikes up and down.

It's almost a given but just how real and tangible can some of the sanctions be on the economy?

I think it will have an impact.

You some people, when the for that's when the sanctions first came in, people sold.

After there were no further sanctions, people bought back in and the market rebounded very quickly.

People are searching for yield and performance.

This next round of sanctions, probably, you will see the same trends but people need more convincing that it is worth going back into russia this time.

And they will wait to see what sanctions will be imposed.

The initial reaction the first time around is quite easy.

The second time around, people are more wary because there is a lot more weight behind the western governments.

More bite?

Yes, and some determination to have some impact to that will create change.

At the moment, we have not really seen any change and the markets have priced that in.

Dramatic shooting news, when he came out, it is a knee-jerk reaction.

But certainly the asian markets, by the end of the day, were back to flat generally speaking.

I have to ask about portugal.

The student docent those -- espriirito sanctos is where you are but not really.

It is a family-owned company.

All of these nations have gone through bailouts but we have nothing growth in europe.

That will be a worry for people.

Unless we see good growth, industry is not going to pick up.

Even in germany, we have seen some slowing recently.

This week, we get the iphone details.

That will be closely watched, to see if the german performance will continue.

People are also watching the french numbers which could be a drag on the whole recovery.

What about yields?

Yields have been below treasury yields.

That is telling another story.

Interest rates will be a lot lower for a lot longer.

That means perhaps the european recovery is far from entrenched.

I think that's true.

The same can be said for the u.s. recovery.

It is probably the slowest recovery we have ever seen out at the u.s., even going back to the great recession.

And it will be a concern to people.

I think there has been a big lesson learned in all these countries.

It is the consumer that is normally the driver of the recovery.

This time it's repaying their debts and getting their own balance sheets in order.

Then we will probably get a property market going on a chair in london and in other places.

There are all these pockets with that happens.

London properties, generally speaking, people are joined to move money offshore from wherever they are.

China and russia, two biggest demands from the middle east as well.

As always for reason and the reasons will change over time and the place is will change.

But generally speaking, if you look at the big pharmaceutical deal, they are doing it -- they are borrowing money from jpmorgan.

They have had to issue bonds.

They are indicating that they think equities will outperform in the longer term while interest rates will stay fairly low.

It's a slow recovery, almost built-in, not built in strong foundations.

This is what everybody is worried about.

Just because you think it might happen, that doesn't mean you sell everything and go to cash.

There are no alternatives, you see.

And let's not forget what the fed action is doing in the end of line environment.

What about here in asia?

We talk about economic recovery.

What about japan?

Are we seeing recovery there?

We will be looking very carefully on friday when we get the inflation data coming in.

There were two points here.

Our base confidence levels have probably come back down.

His popularity is dropping.

His defense force action has alienated some of his support.

We may see some wavering on the third arrow for the third acupuncture pins, however you want to look at it.

[laughter] japan takes a long time to do anything.

Hopefully we will see a change in 12 months but is mostly unrealistic.

L when the equity in markets shut up last year, it was unprecedented.

It was a surprise to people.

Then we saw the pullback to an extent.

The first move was really on the currency.

The problem we've got now is the geopolitical situation has made that a safe haven currency again.

It's odd that we have should job in -- we have shinzo abe going to south america.

Both these governments are fighting for respect both nationally and within asia, being seen as strong partners in asia.

People in asia are a lot more worried about it than people are globally.

The philippines, the vietnamese, these are very nationalistic issues that make more impact locally than they do on the world stage where you're getting

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


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