C. Hoare & Co. | Market commentary

A quick view on...: Greece and the Chinese New Year - 14th February 2012; Late Sunday night the Greek parliament passed austerity measures critical to receiving its second bail-out programme, from the EU/IMF, amidst scenes of social unrest. The vote was passed with a large majority of 199 to 74, but a party whip was required and 27 MPs abstained. The Greek government now needs to find another €325m in structural expenditure cuts during 2012 and provide a guarantee that the government will continue to support the austerity measures after the elections planned for April. Following this, the government must present to the bond markets its plan for voluntary debt write down, although the plan may fall short of its 90%+ acceptance target. As a result the risk of the remaining holders being forced to accept write-downs, and the triggering Credit Default Swaps insurance contracts, remains high. The Chinese New Year holidays have taken place over the last couple of weeks, and as the date changes (a third in January, two thirds in February), interpreting monthly economic data can be challenging. Nevertheless, January figures of -0.5% export growth and -15.3% import growth look weaker than usual, as does a monthly loan figure of Y738bn versus expectations of Y1trn. We are conscious, however, that February data may well bounce back stronger. 2012 will be the final year in office for the President and PM with Xi Jinping (travelling to the US this week) and Li Keqiang expected to take over the respective offices. The Communist Party of China has had many achievements in the last two decades with their technocratic members successfully building an industrial base and infrastructure. However, the real question for us is whether administrative fine tuning will continue to be successful in 2012, or whether China has become more market oriented, and therefore subject to Adam Smith’s ‘animal spirits’ and occasional economic showdown.

Articles: Our outlook for the economy and investment opportunities - 6th September 2011; Consumers and governments face the unenviable task of reducing their debt, which is likely to result in years of low economic growth. In this article, we explore the challenges that face investors in this difficult environment, but also some of the opportunities that we believe will be presented.; Balancing the books

The information contained within these documents is believed to be correct but cannot be guaranteed. Opinions constitute our judgement as at the date shown and are subject to change. The document is not intended as an offer or solicitation to buy or sell securities or any other investment or banking product, nor does it constitute a personal recommendation.

The analysis contained herein has been procured, and may have been acted upon, by C. Hoare & Co. or a connected company for its own purposes, and the results are being made available to you only incidentally. C. Hoare & Co. or a connected company, and their customers, officers and employees, may have a position in, or engage in, transactions in any of the securities mentioned.

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