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Market Tips: Dollar Will Climb to Parity vs. Euro

CNBC.com
Thursday, 19 Feb 2009 | 8:28 AM ET

The euro was higher against the dollar Thursday, after suffering several days of losses versus the US currency, as investors cautiously crept back into stocks. But experts tell CNBC the dollar's strength will continue through to the end of the year.

1-1 for Euro-Dollar by Year-End

Jeffrey Halley, senior manager of FX trading at Saxo Capital Markets, forecasts euro-dollar to near parity by year-end.

Dollar-Won May See More Upside

In the near term, there is probably still a risk of further upside to the dollar-won, says Olivier Desbarres, director of FX strategy at Credit Suisse, after the won declined for the 7th straight session against the dollar.

Dollar and Euro
Dollar and Euro

Hopeful on Market Pick-Up

Expect the market to pick up in the second-half of the year, says Martin Lakos, division director at Macquarie Private Wealth.

Pressure on US Markets

Sean Darby, head of regional strategy with Nomura International, says climbing U.S. unemployment and the banking mess will continue to pressure markets despite goverment efforts to boost the economy.

Where to Invest in the Current Environment?

"You need to look for stocks where the pessimism is priced in already," Minho Roth from FiveT Capital said Thursday, adding that financial stocks look attractive. Nestle is a classic defensive stock, Ian Morley from Quantum Investment Management said, adding he would rather invest in banks over insurers.

Buy Stocks Where the Bad News is Priced In
"You need to look for stocks where the pessimism is priced in already," Minho Roth from FiveT Capital said Thursday, adding that financial stocks look attractive. Nestle is a classic defensive stock, Ian Morley from Quantum Investment Management said, adding he would rather invest in banks over insurers.

"What you have to do is an element of diversification. Corporate bonds, debt, are a place to look at. There are some companies out there who are offering very good returns in what is, essentially, bordering on a deflationary environment," Morley told CNBC.

"You need to be in illiquid securities," Roth suggests. Morley disagrees: "If you are not liquid, you are not solvent."

"The easiest trades right are the so-called 'low-hanging fruit trades' – to bet against what the brokers to you to do," Roth said.

Norwegian Krone and commodity-related currencies like the Australian dollar, are attractive investments, as the yen and dollar's status as a safe haven is fading, according to Roth.

An Alternative Safe Haven

Safe places to keep your money can either be in cash or gold, according to Jacob Schmidt, CEO of Schmidt Research Partners. A third alternative is capital-protected structures, like companies who are part government owned, he adds.

Still Too Early for Low-Risk Takers to Invest

It is too early for a conservative investor to enter the Australian market, say Matthew Kidman, portfolio manager at Wilson Asset Management and Rhett Kessler, portfolio manager at Pengana Capital.

Asian Banks to Outperform Peers in the Future

Investors can look into buying Asian banks as an asset class in late 2009, says Andrew Freris, senior investment strategist, Asia at BNP Paribas Wealth Management.

A-Shares Approaching Near-Term Peak

The Shanghai Composite is probably approaching a near-term peak for the month of February, so it is not really the time to sell, says Phillip Chan, director of Shenyin Wanguo Securities.

Hong Kong Flag
CNBC.com
Hong Kong Flag

20% Correction for HK Market

We may see a confidence crisis in the second-half if no economic stabilization is seen by the first-half, warns Patrick Shum, chief strategist at Karl-Thomson Securities. He tells CNBC the Hong Kong market is most at risk of a 20% correction.

Differentiate Between Sectors

As Simon Godfrey, investment specialist at Fortis Investments does not think that 2009 will have a big beta bet to play in Asia, excluding Japan's stocks, he advises differentiating between sectors.

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