With large multinationals as Philips, Shell, Unilever, Apple, Facebook and Amazon issuing their quarterly reports this week, investors should be extra cautious. Mary Pieterse-Bloem, Professor of Financial Markets at Erasmus School of Economics and Global Head Fixed income in the Global Investment Center of the Private Bank of ABN AMRO, participates in the investment panel discussion on BNR Nieuwsradio, 29 January 2019.
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During this panel discussion, Mary Pieterse-Bloem discusses her last transaction and her expectations for the coming season with the other panel members Karel Selwyn Duijvestijn (MountainShield) and Lodewijk van der Kroft (Comgest).
Professor Mary Pieterse-Bloem's last transaction was a share transaction. Shares were slightly considered in her portfolio, but she opted for a market-neutral position in order to profit from the revival of share prices and to anticipate on the headwind she expects. Based on the growth path she foresees for the economy, Professor Mary Pieterse-Bloem thinks that analysts still overestimate projected earnings growth rates, despite the fact that they have already lowered their expectations. Nevertheless, Professor Pieterse-Bloem does not expect a recession.
The average Earnings Per Share (EPS) is now around 8 or 9 percent. However, there are big differences between individual firms. For example, some firms have started programmes for buying their own shares, which increases EPS. Moreover, there is a difference between firms' volume of trade with China, which also affects their performance. Because she expects only moderate growth, Professor Mary Pieterse Bloem thinks that EPS should be around 4 percent. As such, the EPS is expected to fall sharply and this will have a significant effect on share prices. This means that investors have to be more cautious: not everything you buy will turn into gold anymore.
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Listen to the entire podcast (in Dutch) on BNR Nieuwsradio, 29 January