In the second quarter, the global equity index, MSCI World, recorded new highs. The continuing growth trend of the global economy was responsible for this positive develop-ment. World trade posted solid growth of 4 per cent com-pared to the previous year, which was supported by stronger capital spending, particularly in Asia. In addition, forward indicators still suggest a continuation of global economic growth.
Mixed signals were recorded from the US economy. While the Purchasing Managers Index for the manufacturing sec-tor and consumer confidence developed positively, per-formance fell short of expectations. In contrast, the US unemployment rate developed very positively, falling to its lowest level in 16 years. In addition, consumer spending and private household incomes have risen in comparison to the previous quarter. The US Federal Reserve raised prime rates at the end of the quarter, thereby confirming the improved economic prospects as well as the increase in inflation.
Above-average economic growth continued in the Euro-zone. The Purchasing Managers Index for the manufactur-ing sector in the Eurozone recorded the highest level in six years. This means that companies continue to rate eco-nomic development optimistically. In this environment, the ECB maintained its monetary policy without change.
Furthermore, the Swiss economy continued to grow at a solid pace; however, key indicators weakened. The Pur-chasing Managers Index for the manufacturing sector as well as various forward indicators of the economy fell short of expectations, which signaled that the economy's upswing is slowly tailing off. Nevertheless, the data still indicate above-average Swiss economic growth. This was confirmed by increased exports as well as the improved data for private consumption. Based on predominantly positive data, the SNB maintained its monetary policy.
In the second quarter, Japan’s exports increased more than they have in over two years. Private capital spending also increased, which, in addition to exports, count as one of the most important driving forces of economic growth. Yet private consumption still developed relatively weakly. In spite of this, the predominantly positive economic data indicated a solid economic trend.
Large emerging countries had to face a number of setbacks during the second quarter, following a strong start to the year. In China, the economic momentum decreased com-pared to the previous quarter. The main cause of this was the stricter credit and real estate market policies of the government. In Brazil, a recent phase of political instability gripped the local markets and threatens to shake the tax reform process.
The price of oil continued to plunge. A barrel of Brent crude oil cost around USD 46.00 at the end of the quarter; 20 per cent less than at the beginning of the year.
Portfolio return (second quarter 2017)
Looking at the second quarter of 2017, the verdict is cau-tiously optimistic: Following a respectable April (0.83 per cent), May yielded performance of 0.31 per cent. This was followed by the first month of the current year by negative performance: June at -0.36 per cent. Together, this makes 0.78 per cent for the second quarter 2017.
All asset classes of the portfolio contributed positively to the quarterly results, with the exception of the alternative investments (-0.02 percentage points).
Expanding the horizon to the entire first half of 2017, a positive balance of 2.96 per cent performance can be drawn. A good half of this materialised in February. A total of five positive months compare with just one negative one.