Seeking Alpha

Daniel Zurbrügg's  Instablog

Daniel Zurbrügg
Send Message
Daniel Zurbrügg is the Managing Partner of Swiss Infinity Global Investmetns GmbH(http://www.swissinfinity.ch), a Swiss based independent asset management firm. The firm provides clients with independent investment research, asset management and asset protection services. With a global network... More
My company:
Swiss Infinity Global Investments GmbH
  • Investing in bank stocks – finally a light at the end of the tunnel?
     
    Investors in banking stocks such as Citibank, UBS and many others certainly have had a hard time in recent years. Many stocks have fallen by 60 percent or more and investors lost a lot of money. The financial sector has also been the weakest market sector in the past few years. Given the very disappointing performance of such stocks, it is not surprising that the broader market indices have not been able to make any meaningful advance in the past few years, keep in mind that the Dow today still stands at pretty much the same level we had ten years ago. The banking sector has been without doubt heavily leveraged in the past and the recent financial crisis has shown how quickly liquidity problems can spread when most major banks are undercapitalized and therefore overleveraged. It remains to be seen whether the recent regulatory changes, which will make it necessary for banks to hold more capital, are sufficient. What is certain is that troubled and undercapitalized banks will need to increase capital significantly, either by holding back profits and/or by selling new shares. 
    But are there any interesting investment opportunities or are all banks bad investments? While we remain sceptical for many large banking organizations and would not consider making any investments there, we are starting to see some real opportunities in the sector. We like banks that have been relatively conservative in the past and have therefore weathered the storm of the financial crisis relatively well and without any bailout programs. At the same time, a bank has to have growth opportunities such as emerging markets and the capital necessary to fund such expansions. That is why we like certain banks in Canada and Australia that have healthy balance sheets, attractive dividends, moderate valuations and significant potential to grow their businesses in the years to come, especially through their activities in emerging markets.
     
    Feb 01 6:22 AM | Link | Comment!
  • Australian Flooding – Land under water in Down Under
    The devastating flooding in Queensland/Australia has caused record damages of up to USD 8bln. What the true long-term damage is still remains to be seen. Short-term, the consequences are rising prices for agriculture and commodities and a reduction of Australia’s GDP by about half a percent in 2011. While the flooding has mainly caused immediate disruptions to certain industries such as the coal business, it has certainly caused long-term damages to farming in general. It is not only the delay in wheat harvest and actual damage to this year’s wheat crop, but the much bigger problem is that the flood washed away layers of fertile soil, which will cause a true long-term damage to agriculture production in the area. Under normal market circumstances such an event would cause prices to rise sharply at first and then move lower, the risk of seeing prices at much higher levels for a prolonged period of time are very significant. The flooding in Australia is only another event in a string of natural disasters we have seen in the recent past. This comes at a time when the market for agriculture commodities is already dealing with a very tight supply/demand situation and with record amounts of financial investments having driven prices up strongly. Australia’s prime minister is proposing a new tax of an additional 0.5% on all incomes over AUD 50’000/year and 1.0% for incomes over AUD 100’000/year. The government also wants to cut back on other investments to help and support people that got hit hard by the flooding. We think that the investment case for Australia hasn’t changed at all despite the devastating flooding. The future for Australia looks bright, given its unique position as being one of the world’s richest commodity areas and its close proximity to the fast growing emerging markets.
    Feb 01 6:21 AM | Link | Comment!
  • Estonia and the Euro – joining a sinking ship?
    Estonia has recently become the 17th member of the Euro currency zone. Given Estonia’s relatively small size, with only 1.3mln citizens, this might not be big news, but Estonia is the first ex-Soviet state to adopt the Euro and it comes at a time when many doubt the future of Europe’s single currency. Despite the recent problems in Europe with the Greek bailout, the crisis in Ireland and the possibility of further countries needing bailouts, polls show that a majority of people in Estonia support the recent move to become a member of the Euro. Of course, people are worried that prices will rise but it is for many the final proof that they have fully arrived in the west. The measures taken to cut spending and deficits in order to fulfill the entry criteria for the Euro zone brought GDP down more than 10 percent and caused the unemployment rate to soar to 16%. While the country is the youngest and poorest member of the Euro club, it is also among the ones with the lowest debt and deficit levels. But how promising is the perspective of joining the Euro given its recent difficulties and the potential for further nations to become financial emergencies that need to be dealt with? “We will never let the Euro down…”, these were the words that French president, Nicolas Sarkozy used in his recent speech at the World Economic Forum in Davos, Switzerland. Since politicians in Europe certainly don’t have much choice other than talking-up the Euro, the question is whether their opinions really reflect the views of their people. An increasing number of people in Germany and France feel that they would be better off having their own currencies back. While this is certainly understandable for Germany, given the fact that they make the largest financial contributions to the Euro zone, it is somewhat surprising that we see a similar development in France. Recent polls show that there is a growing number of people who support the Front National, which is considered a far right wing party, formerly headed by Jean-Marie Le Pen who was recently succeeded by his youngest daughter Marine. Marine Le Pen is becoming increasingly popular among French people and also an increasing number of conservatives are supporting her ideas. Marine Le Pen could become a real opponent for president Sarkozy in next year’s elections. One of the main priorities on the agenda of Front National is the exit from the European Union and the Euro zone. Similar tendencies can be observed in countries such as Italy and the Netherlands and should this trend continue then this could become a real danger for the European Union in the years to come.
     
    Feb 01 6:20 AM | Link | Comment!
Full index of posts »
Latest Followers

StockTalks

  • Latest Investment update "Echo from the Alps" out now...http://bit.ly/UPh5up
    Dec 10, 2012
  • Expect more consolidation in stocks during next 2-3 weeks, however 2013 could see positive surprises once the global sentiment is improving
    Nov 15, 2012
  • Very interesting opportunities in Asia, Parkway just got a higher offer this morning...
    Jul 26, 2010
More »
Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.