Expectations in Five Stock Markets

Jyske Bank’s structured investment JBPB Asia+ 2007 offers an investment in China, South Korea, Europe, Japan and the U.S and the Icelandic dollar. Here is why. Jyske Bank expects Icelandic kroner to remain strong and perhaps rise versus the U.S. dollar. Iceland’s economy is expanding and an increasing inflow of international capital is expected to support the positive trend in the economy and the Icelandic currency.

JBPB Asia+ 2007 includes 60% overweight of Asian equities because there is potentially a higher return in this region compared to the rest of the world. Asian equity prices have already increased significantly in 2003. Though some potential has already been lost in this growth Asian equities are still considerably cheaper then in the U.S. or Europe and the growth forecasts in Asia are much better than in the West.

The Japanese Topix index is at the same level as it was in 1985. The past suggests that when equity prices have not increased in 18 years, the market may hold a considerable potential. In recent years, Japan’s corporate sector debt has been considerably reduced, and this increases potential for companies to buy back their own shares. Growth figures are improving, and for the first time in many years

several large Japanese banks have raised their earnings forecasts. International investors are still underweighted in Japan. The risk is high, but the potential equally great. Indeed.

European structural problems in the labor market, an aging population and the pension system halt the rate of European growth. However, compared with U.S. shares prices are attractive. Europe’s level of debt is much lower than the U.S.

20% of the investment is in the U.S. as the economy that remains the driving force of the world economy. The U.S. has been stimulated by repeated interest rate and tax cuts so it cannot be discounted completely. The stimulation has had a positive effect on the level of employment and combined with a growing population there is some likelihood of a self-supporting upswing (driven by an increase in the level of employment).

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