Asset Allocation for May 2016

In April stock markets got round to 2016Y heights with the support of commodity prices rebound and improved forecasts of Chinese economy.

OPEC and Russia meeting on 17th April led to no purpose (no decision on oil production freezing hasn’t been made). After that oil prices surprisingly rose to $45/bbl. We ascribe such bullish activity with speculative demand on commodities made by Chinese traders. They’ve intensified their investments in commodities from $4 bln to $9 bln in April. In the nearest future this may cause high volatility on commodity markets.

In addition, investors eased their fears about Chinese economy slowdown. Monetary policy of National Bank of China leads to economic revival. But both China and US remain main and objective threats of world economy.

Threat and challenges in world markets:
   - Presidential Elections in US (8th November 2016).
   - Credit market bubble in China.
   - Rapid destabilization in the middle East and jump in oil prices.
   - BREXIT – UK referendum (23th June 2016).

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