1.) Market environment and main drivers

Market development over the past 12 months has largely been affected by the trade conflict between the US and China. US President Trump caused enormous uncertainty with his foreign trade statements, which meanwhile negatively influence many economic forecasts and are are strating to take their toll in the real economy. Uncertainties often led to emotional and thus increasingly irrational actions and reactions in the financial markets. Overall, the events had an extremely negative impact on the cyclical market segment and caused enormous setbacks in, for example, the autotomive and steel stegmetns asl wel las small caps. In principle, this is exactly the opposite move compared to the start of the Trump legislature and its tax reduction measures (see Figure 1).

These uncertainties and negative revisions of certainty economic forecasts led to decreasing yields on a global scale. At the beginning of 2019, almost all experts expected additional interest rate increases as shown in Figure 2. It also shows, that none of the estimates was anywhere close to the actual change in yield as well as no anticipation of the magnitude which hthe trade confluct and its accompanying uncertainties would have on central banks are fixed income markets. This development led to superior performance of so called highly priced “bond proxy” quality stocks. An adverse effect could be seen within the banking and financial segments, which suffered in this environment.

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