The most preferred emerging markets

http://economictimes.indiatimes.com/markets/global-markets/Emerging-markets-prospects-brighten-amid-Euro-zone-concerns/articleshow/10880321.cms

An entree to emerging markets

Reward for risk

Investors are being rewarded for the risk they are taking by investing in emerging markets, not for higher economic growth, Sauter says.

And, as the risks of investing in emerging markets are high, the long-term returns should be high.

Some of these risks are well known. Many companies in emerging markets are under family control. Their interests may not be aligned with those of minority shareholders and corporate governance standards can be low.

However, the risks of investing in Asia, in particular, are fewer than they used to be as the countries continue to develop, says Kerry Series, the chief investment officer of Eight Investment Partners, which specialises in the Asia-Pacific region.

''Emerging markets are still volatile but investors just have to put up with volatility if they invest in these markets,'' Series says, adding that emerging markets are still peripheral for global investors.

When there is investor nervousness, they withdraw their money from emerging markets first.

However, the volatility creates opportunities for astute fund managers, Series says.

While the link between economic growth and sharemarket performance cannot be established, robust economic growth is certainly not bad for share prices. Series says the fact the big developed countries will be growing slowly will likely mean more investor funds will be going into Asian shares, moving Asian share valuations from less than their true worth to a premium in the next several years.

Still, concerns persist, particularly regarding China, the biggest emerging market. Higher interest rates to subdue inflation have led to a credit crunch, squeezing property developers and slowing exports as a result of slower global growth, the chief economist at AMP Capital Investors, Shane Oliver, says.

Nevertheless, export growth in developing Asia, overall, has proved remarkably resilient, the portfolio manager of the Fidelity Asia Fund, David Urquhart, says.

Although Asia is certainly not immune to a slowdown in the West, the region's economy is significantly less reliant on exports to the West than many investors realise, he says. More than half of Asian exports are now traded within Asia or other emerging markets, which has meant export growth has remained resilient, even as growth in the West has slowed this year, Urquhart says.

Read more: http://www.smh.com.au/money/investing/an-entree-to-emerging-markets-20111111-1nbgy.html#ixzz1fzRPsnfO

A week that knocked the financial world off its axis

Just another quiet summer week, really. The FTSE 100 started at 5,247 and ended at 5,320. It was hardly worth coming out of the sea to check your BlackBerry.

The chart shows the relative performance of Europe's high and low yielding shares but I could have shown a similar chart for Japan, where income has provided an escape from two lost decades for investors. 

By Tom Stevenson, on the Markets

2:40PM BST 13 Aug 2011

Comment

If only. The modest net gain for stock market investors disguised the most dramatic few days in the markets since 2008. If someone had offered no change as Wall Street was tumbling 6.7pc last Monday, few would have turned it down, I suspect.

That is perhaps the first lesson to be learned – the remarkable capacity for markets to confound investors' expectations. If the same patterns played out each time, we would have got the hang of it by now. But each crisis is different enough to ensure that history never quiet repeats itself, only rhymes.

I have drawn a few other conclusions from this fascinating week. First, while developed market shares are undoubtedly cheap they may remain so, and for good reason. It is quite unprecedented, that Fed chairman Ben Bernanke should have been prepared to pre-commit to near zero interest rates two years into the future. This speaks volumes about his pessimism regarding America's economic outlook. The persistent unemployment and low growth implicit in his assessment is incompatible with the Government's assumptions in its deficit reduction plan or many of Wall Street's earnings forecasts.

I think we are seeing a change in the investment environment on a par with the birth of the cult of the equity in the 1950s. That was when, for the first time, equities began yielding less than fixed income securities on the grounds that investors considered the growth potential of share dividends outweighed the extra risk borne by equity investors.

In recent years, the rare occasions when equities have yielded more than government securities have been viewed as a buy signal for shares, but in a low-growth, low-interest rate environment, this premium could become the norm again.

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Having been disappointed in recent years by the vain wait for jam tomorrow, in the form of capital growth, investors are likely to demand jam today, in the form of a high and sustainable income.

This renewed focus on income makes sense because, as the chart clearly shows, shares paying high dividends are not simply interesting to investors seeking to replace the income they can no longer find in cash or by investing in government securities. Income is both the main contributor to the total return from shares and an excellent indicator of future outperformance.

The chart shows the relative performance of Europe's high and low yielding shares but I could have shown a similar chart for Japan, where income has provided an escape from two lost decades for investors.

Looking forward, careful stock selection will be key to investment success. The sell-off has been indiscriminate and this is throwing up plenty of opportunities: good companies at great prices. I wonder whether we might not look back with some disbelief at a time when BP was available at just 5.5 times expected earnings or AstraZeneca at 5.7 times with a dividend yield of 6.5pc. Investor sentiment, measured using a combination of indicators such as market volatility, directors' dealings and fund flows, last week hit its lowest point since the collapse of Lehman Brothers .

What has also become clear this week is that we now inhabit a two-speed world. The transformation of emerging markets, especially those in Asia, continues regardless of the volatility in Western stock markets. It is interesting that the two worlds' markets have not become de-linked in the same way as their underlying economies have. I would be surprised if that did not change soon. The growth differential between Asia outside Japan and the developed world before, during and since the financial crisis argues for a much greater bias towards the region.

The unstoppable shift from West to East has important implications for stock markets closer to home because a key part of any analysis of companies quoted in London and New York is now their exposure to the growth potential of emerging markets. It is one reason why German stocks continue to look more interesting than their counterparts in other parts of Europe. Companies such as BMW and Siemens have understood and grasped the emerging market opportunity.

Meanwhile, let's hope tomorrow really does bring just another quiet summer week. We could all do with one.

Tom Stevenson is an investment director at Fidelity International. The views expressed are his own.


http://www.telegraph.co.uk/finance/comment/tom-stevenson/8699694/A-week-that-knocked-the-financial-world-off-its-axis.html

Chart of the day: Flows to emerging market equity funds

In terms of fund flows, 2011 does not seem to be turning out well for emerging markets. In fact, today's chart of the day shows that funds have been withdrawn from emerging markets in 2011 so far as compared to 2009 and 2010. In those years, investors rushed to emerging market shores to capitalise on the strong growth opportunities there as the developed world languished in recession. Now with inflation rearing its ugly head and food prices soaring, concerns have begun to emerge from these fast growing markets too. 




* Up to Feb 8
Data Source: The Economist

Will emerging markets be 2011’s great bubble?

INVESTING
Will emerging markets be 2011’s great bubble?

SUJATA RAO
LONDON— Reuters
Published Friday, Dec. 17, 2010 10:01AM EST
Last updated Wednesday, Dec. 22, 2010 5:50PM EST


Emerging markets, the consensus trade for 2011, look set for further heavy inflows of investment dollars, raising questions over how much more new money they can comfortably absorb without igniting an asset bubble.

Most fund managers at a recent Reuters summit picked emerging markets as a top bet for next year, citing double-digit returns, underpinned by rising incomes and fast economic growth.

Equity portfolio flows to emerging markets are set to reach $186-billion (U.S.) this year, and, while they are seen falling a touch to $143-billion next year, according to the Institute for International Finance (IIF), they will still be more than double the $62-billion annual average seen between 2005 and 2009.

Yet, some are starting to ask if investors are getting carried away. Not only do unbridled portfolio flows risk inflating sector valuations into bubble territory, but the flows may be based on unrealistic expectations of long-term returns.

“The bigger bubble risk is the investor expectation of EM, there’s such euphoria,” said Mark Donovan, chief executive officer of Robeco, which manages €146-billion ($194.3-billion). “I’m always wary of these herd moves into certain asset classes, generally they are not well-timed.”

SWEET SPOT HIDES BITTER TRUTH

Mr. Donovan does not question the underlying emerging markets growth story. But he and some others believe new investors may be ignoring potential problems, within and outside the sector.

Emerging markets have been in a sweet spot this past year or two as liquidity unleashed by Western central banks has pumped up the market, fuelling double-digit returns.

A Reuters poll forecasts emerging returns will far outstrip U.S. and UK equity gains in 2011. Excess liquidity, however, is fuelling inflation in developing economies, potentially leading to overheating. Higher U.S. Treasury yields could also become a headwind.

“My central scenario is that in 2011 emerging markets will be okay. Given where valuations are you will still get a positive absolute return,” said John-Paul Smith, chief emerging markets strategist at Deutsche Bank in London.

“But some of the outsize returns forecasts are probably way too high ... I’m concerned that if people become too optimistic we could see a bubble-type situation developing. When the bubble bursts, it has horrible repercussions for the real economy.”

EMERGING MARKETS ARE ... STILL EMERGING

One worry, Mr. Smith says, is that the inflows risk encouraging emerging policymakers’ hubris, removing the pressure for reform.

Some doomsayers note big capital inflow peaks often precede crises. This may be especially true of emerging markets which remains a relatively small, illiquid asset class: the market capitalization of the 37-country MSCI emerging index, is less than a third of the U.S. S&P 500.

That means a large-scale cash influx can quickly inflate asset prices to unsustainable levels, risking a repeat of the familiar boom-bust emerging market cycles.

RBC estimates that a 1 per cent re-allocation of global equity and debt holdings will send $500-billion into emerging markets – more than 10 per cent of the MSCI emerging market cap.

NOT YET A BUBBLE

At present, emerging valuations are not in bubble territory – they trade at a discount to developed markets at around 11.5 times forward earnings.

Valuations are still below 2007 peaks and well off levels during the dot-com bubble in the late 1990s when some stocks were trading at 60-80 times forward earnings. And the volume of securities available for investment is growing.

The MSCI EM’s market capitalisation has grown by around 10 per cent a year in the past decade and emerging markets’ share of the world index has tripled to 14 per cent. The emerging debt universe too has doubled to around $6-trillion over the past five years, JPMorgan says.

Still, with investors piling in, too much cash could in coming years end up chasing too little market cap.

Global equity fund allocations to emerging markets now stand at 16 per cent of assets under management – in dollar terms that is $1.5-trillion, Barclays Capital said, noting bond allocations are at 7.2 per cent. Both are close to pre-crisis highs.

“(Positioning) has reached levels at which investors rightly question the sustainability of the EM flows story going into 2011,” Barclays analysts said in a note.

SIGNS OF NERVOUSNESS

There are signs of wariness. Many investors say that instead of increasing outright EM longs, they prefer multinationals such as Unilever that have exposure to emerging markets.

Another tactic has been to hedge EM exposure via Australian bonds, which are seen making big gains in case of a hard landing in China – a scenario feared by many.

Michael Power, global strategist at Investec Asset Management, says 2011 may well shape up to be the year in which investors learn not to be unequivocally bullish on the sector.

“People are looking at EM as a cake and saying ‘I want a slice,’ without looking at the ingredients of that cake. So some countries that are not born equal are being swept along in the trade along with the deserving ones,” he said.

“When bubbles burst, there is a fallout and the deserving emerging markets will be considered guilty by association.”

Market status of countries 'fall' into three categories: Frontier, Emerging and Developed

Received this interesting globe map in my email. TQ

If we let the market status of countries 'fall' into three categories i.e. Frontier, Emerging and Developed, it would look exactly like the one on the left. According to FTSE Group a provider of economic and financial data, this is done on the basis of their economic size, wealth, quality of markets, depth and breadth of markets.

What we are interested in and would like to discover for ourselves are the Frontier Markets. Vietnam, Sri Lanka and Croatia to name a few. Let's discover Vietnam!

Forget bubble fears

Questor share tips: forget bubble fears, Templeton Emerging Markets remains a buy

Questors does not believe emerging markets have quite become a bubble yet and recommends buying Templeton Emerging Markets.

Published: 5:30AM GMT 26 Jan 2010

Are emerging markets in a bubble or not? This is the debate that has been raging for a couple of months now. Although there is the chance that a bubble may emerge, Questor feels we are not there yet – and Citigroup agrees.

“Asset price gains in emerging markets have been particularly strong recently, although we’re not convinced that it’s right to talk about bubbles just yet,” according to economist David Lubin. “There is little to suggest that the price appreciation we’ve seen in emerging equity markets exhibits the kind of characteristics seen in previous equity market bubbles,” he added

However, this does not mean it is all plain sailing. By their nature, emerging markets are volatile and risky. There is a valuation risk once stimulus packages are withdrawn later this year.

Valuations are also likely to be supported by a wave of money as investors continue to releverage into risk positions. Some commentators have suggested selling part of their holdings and running with the rest of the investment. This is a perfect strategy for cautious investors.

However, for now Questor is comfortable maintaining a buy stance on Templeton Emerging Markets Investment Trust, which was recommended on January 5 last year and is up 78pc compared with a market up 16pc.

As of January 22 the funds net asset value stood at 542.97p.


http://www.telegraph.co.uk/finance/newsbysector/epic/tem/7073100/Questor-share-tips--forget-bubble-fears-Templeton-Emerging-Markets-remains-a-buy.html

Outlook 2010: Emerging Markets to lead the recovery

Outlook 2010: Emerging Markets to lead the recovery
Investors who held their nerve have seen great returns as emerging economies continue to out-perform their developed counterparts. We ask those in the know whether 2010 offers the same investment opportunties?

Compiled by Emma Wall
Published: 3:58PM GMT 15 Dec 2009

India's vibrant economy has produced a 250m-strong middle class Photo: HEATHCLIFF O'MALLEY

When The Association of Investment Companies (AIC) asked investment company fund managers to tip their top performing region for 2010, emerging markets came top with 35pc of the vote. Second and third were also sectors that can be included in the emerging markets umbrella- Latin America and the Far East excluding Japan respectively with 22pc and 18pc of the vote.

Dr Slim Feriani, chief executive of Advance Emerging Capital and manager of Advance Developing Markets said: “The performance of emerging market equities has handsomely outpaced that of developing markets in the past five years and we expect that outperformance to continue over the next five years.


Emerging countries have emerged as the “relative winners” from the subprime crisis and resulting recession for two prime reasons: the quality of their sovereign and household balance sheets has never looked so strong compared with developed countries as it does currently; and their economic and corporate earnings growth is and will continue to easily outstrip that of the developed world in both real and nominal terms for the foreseeable future."

Following Schroders’ annual outlook for 2010 media presentation, Alan Brown and Keith Wade predicted that the current global rally is likely to continue into 2010 with emerging markets leading the economic recovery. However, they warned that there are a number of potential monetary and economic factors that could derail the global recovery.

To protect against these, Schroders recommended a more dynamic approach to asset management involving greater diversification and flexibility in order to protect clients’ portfolios.

Close Asset Management believe that emerging markets here to stay. "The growing strain on Western consumers and government finances are likely to be reflected in weaker macroeconomic data and pressure on revenues for many years to come," said Stuart Dyer, head of distribution for Close. "Equity market valuations do not look well underpinned in an environment of low or faltering growth.

For investors seeking long-term growth emerging markets are likely to look increasingly attractive and we are already seeing a sea-change in risk attitudes to investment in these markets; expect this to continue and exposure to these markets to increase."

Fidelity International's Mr Teera Chanpongsang, portfolio manager for their India Focus Fund and Emerging Markets Fund agreed. He said that emerging markets would continue to offer strong long term investment opportunities and stable governments and developing industry will fuel growth.

He said: “Early signs of a recovery are visible in recent economic indicators and earnings upgrades. The region has one of the strongest GDP growth rates in the world, driven by favourable demographics and healthy population growth, which means more people are added to the region’s work force."

http://www.telegraph.co.uk/finance/personalfinance/investing/6817246/Outlook-2010-Emerging-Markets-to-lead-the-recovery.html

Country risk - Emerging economies caught in the storm

Country risk - Emerging economies caught in the storm

<<
- The global crisis is affecting emerging country risk
- The crisis has revealed their vulnerabilities, but with contrasting situations
- Analysis of risk in Russia, Turkey and India >>

Some countries are in a better position than others to face the crisis. Some countries have resources and structures that offer more shelter from the global crisis: Singapore (rated AA), Chile (A), Czech Republic (A), HongKong (A), Malaysia (A), Slovenia (A), Taiwan (A), Bahrain (BB), Botswana (BB),Brazil (BB), Israel (BB), South Korea (BB), Kuwait (BB), Mexico (BB), Oman(BB), Poland (BB), Qatar (BB), Saudi Arabia (BB), Slovakia (BB), South Africa(BB), Thailand (BB) and Tunisia (BB).


PARIS, Jan. 15 /CNW Telbec/ -

Euler Hermes has published its analysis of country risk in a global economic crisis. Country risk takes on another dimension in a recessionary environment. Emerging countries are faced with dwindling sources of external financing, the recession of the major economies and falling commodities prices. These difficulties have been exacerbated by bank liquidity problems, volatile exchange rates and the withdrawal of foreign capital. These economies' weaknesses, less visible during growth periods, have resurfaced. Countries that seemed perfectly safe a short while ago now represent a risk for the companies that do business with them.

Against this backdrop, Euler Hermes Country Risk Analyst David Atkinson said: "The present economic crisis is affecting all countries, with no exception. Although some countries are in a better position to resist the crisis, many are experiencing a rapid deterioration in their situation. It is essential that trade partners and exporters keep a close watch on these countries, on the reforms implemented and on future trends".

Emerging economies are slowing

Euler Hermes is forecasting growth of less than 1% for the global economy in 2009 with the large developed economies experiencing their first recession since World War II. At the same time, emerging economies are being severely hurt by a world crisis that does not correspond to a normal economic cycle.

The decoupling theory, whereby emerging economies would continue to grow, has
been largely invalidated. These countries now face numerous problems:
<< - Wide-scale withdrawal of foreign investment
- Drop in exports
- Tumbling commodities prices (oil, etc.)

Against this difficult background, Euler Hermes expects economic growth to slow sharply in emerging countries.
-----------------------------------------------------
Regional real GDP 2003-2006/ 2007/ 2008/ 2009
(% change) annual Euler Hermes Euler Hermes
average projections projections
-------------------------------------------------------------------------
Emerging Europe 6.8/ 7.0/ 5.4/ 2.0
-------------------------------------------------------------------------
Russia 7.1/ 8.1/ 6.1/ 1.5
-------------------------------------------------------------------------
Turkey 7.5/ 4.5/ 2.3/ 1.0
-------------------------------------------------------------------------
Emerging Asia 8.4/ 9.2/ 7.1/ 5.0
-------------------------------------------------------------------------
China 10.5/ 11.9/ 9.2/ 7.0
-------------------------------------------------------------------------
India 8.7/ 9.0/ 7.0/ 5.0
-------------------------------------------------------------------------
Latin America 4.6/ 5.5/ 4.6/ 1.9
-------------------------------------------------------------------------
Brazil 3.4/ 5.1/ 5.5/ 2.3
-------------------------------------------------------------------------
Mexico 3.3/ 3.3/ 2.0/ 0.0
-------------------------------------------------------------------------
Middle East & Africa 5.8/ 5.7/ 5.9/ 4.6
-------------------------------------------------------------------------

A growing number of high-risk countries
The overall trend in the risk ratings assigned by Euler Hermes to each country (see methodology) reflects the general trend in risk of international trade. With the risk ratings of 16 countries downgraded in 2008, international trade has entered a more turbulent period.
---------------------------
Net Country Grade Changes
---------------------------
2000 -1
2001 -5
2002 -8
2003 +3
2004 +11
2005 +1
2006 -1
2007 +3
2008 -16
---------------------------
At the individual level, each country's rating reflects its sensitivity to a downturn in its environment and its capacity to stand firm. In the present conditions, individual country risk ratings can change rapidly and should therefore be monitored closely by exporters and their partners. Since the economic crisis worsened, Euler Hermes has downgraded the country risk ratings of eleven countries:
----------------------------------
Grade Change
----------------------------------
South Korea A to BB
----------------------------------
Hungary B to C
----------------------------------
Romania B to C
----------------------------------
Bulgaria B to C
----------------------------------
Lithuania B to C
----------------------------------
Guatemala B to C
----------------------------------
Jordan B to C
----------------------------------
Iceland A to D
----------------------------------
Argentina C to D
----------------------------------
Pakistan C to D
----------------------------------
Vietnam C to D
----------------------------------
Euler Hermes has identified a group of more vulnerable countries:
- With a C rating: Hungary, Romania, Russia, Turkey, Lithuania, Bulgaria, Latvia, Kazakhstan, Indonesia, Dominican Republic, Honduras and Jamaica
- With a D rating: Iceland, Ukraine, Serbia, Bosnia Herzegovina, Vietnam, Argentina, Venezuela, Ecuador, Kenya, Lebanon and Pakistan
>>

Some countries are in a better position than others to face the crisis:
Some countries have resources and structures that offer more shelter from the global crisis: Singapore (rated AA), Chile (A), Czech Republic (A), Hong Kong (A), Malaysia (A), Slovenia (A), Taiwan (A), Bahrain (BB), Botswana (BB), Brazil (BB), Israel (BB), South Korea (BB), Kuwait (BB), Mexico (BB), Oman (BB), Poland (BB), Qatar (BB), Saudi Arabia (BB), Slovakia (BB), South Africa (BB), Thailand (BB) and Tunisia (BB).

Russia: liquidity crunch and tumbling oil prices
Russia's economic growth is expected to slow significantly, from 6.1% in 2008 to 1.5% in 2009 according to Euler Hermes estimates, after several strong years (7.4% in 2006 and 8.1% in 2007).

The rapid slowdown was visible in the fourth quarter of 2008 with a very sharp fall in industrial production.

The business slowdown has been accompanied by a slump in the share prices of listed Russian companies (down 70% in six months) and the weakening of the rouble, down 13% against the dollar, despite heavy intervention.

Foreign exchange reserves have decreased by more than 25% since August 2008 and the fall in the price of oil will have a significant impact on the fiscal and external current account balances.

Euler Hermes has left its C rating unchanged but notes the risks from banking and corporate foreign exchange illiquidity and lower oil prices.

Turkey: strong inflation and low foreign exchange reserves
Turkey's economic growth has slowed significantly since 2007 (6.9% in 2006, 4.5% in 2007). Euler Hermes is expecting economic growth to stand at 2.3% in 2008 and fall to 1.0% in 2009.

Inflation remains relatively high. Euler Hermes estimates that the inflation rate will have risen to 10.1% in 2008 and remain at a similar level in 2009 (10%).

The large current account deficit and reliance on short time capital flows is a key vulnerability and the Turkish Lira has fallen sharply.

Foreign exchange reserves have also fallen but currently still cover 3.5 months of imports, though only 60% of external debt due in 2009.

Euler Hermes has left its C rating unchanged but is closely monitoring the situation, including developments with regards to the IMF programme currently under discussion.

India: substantial foreign exchange reserves but limited possibilities
India recorded a sharp downturn in industrial activity in the fourth quarter of 2008.

The banking sector has been relatively sheltered from the global financial crisis directly though credit conditions have tightened noticeably.

The Indian stock market and exchange rates have also been affected. Economic growth has slowed significantly but remains relatively high in the global context (7.0% in 2008 and 5.0% in 2009 according to Euler Hermes forecasts).

Government support for the currency have significantly decreased into foreign exchange reserves but these still cover seven months of imports and the total stock of external debt.

However, the size of the fiscal deficit considerably constraints government action to offset the slowdown in economic activity.

Euler Hermes has maintained its B rating. Regional and political uncertainties will also need to be monitored.

#################################

Technical details

Methodology

Euler Hermes assigns each country a risk rating that reflects thecountry's economic and political risk. The economic factors taken into accountare the macroeconomic indicators (indebtedness, fiscal deficit, etc) andinstitutional and structural factors. The political factors taken into accountare the efficiency and stability of the political system in place. Thecombination of these two types of indicators are reflected in a rating - AA,A, BB, B, C or D; AA is the strongest rating. This classification constitutesa first filter for any credit limit request and influences the terms andconditions of cover extended by Euler Hermes.

Euler Hermes country risk analysis

Euler Hermes country risk analysisThree Euler Hermes specialists, two in London and one in Hamburg, arededicated to country risk. A country risk committee, which also includesrepresentative of group subsidiaries, meets every two months. The country riskspecialists' work is published in a weekly bulletin. Any change in a country'srisk results in an immediate, ad hoc review.

David Atkinson is one of Euler Hermes' three country risk analysts. Hejoined the group in 1999 and and has established a Group-wide framework forcountry risk analysis. Previously, David spent twenty-five years ininternational banking as an emerging markets and country risk analyst,specialising in Latin America, Eastern and Southern Europe and East Asiaincluding China. David is based in the United Kingdom and holds a degree inEconomics from the University of Nottingham.
-------------------------------------------------------------------------

Euler Hermes is the worldwide leader in credit insurance and one of theleaders in the areas of bonding, guarantees and collections. With 6,000employees in over 50 countries, Euler Hermes offers a complete range ofservices for the management of B-to-B trade receivables and posted aconsolidated turnover of (euro) 2.1 billion in 2007.

Euler Hermes has developed a credit intelligence network that enables itto analyse the financial stability of 40 million businesses across theglobe. The group protectsworldwide business transactions totalling(euro) 800 billion.

Euler Hermes, subsidiary of AGF and a member of the Allianz group, islisted on Euronext Paris. The group and its principal credit insurancesubsidiaries are rated AA- by Standard & Poor's. http://www.eulerhermes.com/

-------------------------------------------------------------------------

These assessments are, as always, subject to the disclaimer provided below.
Cautionary Note Regarding Forward-Looking Statements: Certain of thestatements contained herein may be statements of future expectations and otherforward-looking statements that are based on management's current views andassumptions and involve known and unknown risks and uncertainties that couldcause actual results, performance or events to differ materially from thoseexpressed or implied in such statements. In addition to statements which areforward-looking by reason of context, the words "may, will, should, expects,plans, intends, anticipates, believes, estimates, predicts, potential, orcontinue" and similar expressions identify forward-looking statements. Actualresults, performance or events may differ materially from those in suchstatements due to, without limitation, (i) general economic conditions,including in particular economic conditions in the Allianz SE's core businessand core markets, (ii) performance of financial markets, including emergingmarkets, (iii) the frequency and severity of insured loss events, (iv)mortality and morbidity levels and trends, (v) persistency levels, (vi) theextent of credit defaults (vii) interest rate levels, (viii) currency exchangerates including the Euro-U.S. Dollar exchange rate, (ix) changing levels ofcompetition, (*) changes in laws and regulations, including monetary convergenceand the European Monetary Union, (xi) changes in the policies of central banksand/or foreign governments, (xii) the impact of acquisitions, includingrelated integration issues, (xiii) reorganization measures and (xiv) generalcompetitive factors, in each case on a local, regional, national and/or globalbasis. Many of these factors may be more likely to occur, or more pronounced,as a result of terrorist activities and their consequences. The mattersdiscussed herein may also involve risks and uncertainties described from timeto time in Allianz SE's filings with the U.S. Securities and ExchangeCommission. The Group assumes no obligation to update any forward-lookinginformation contained herein.


For further information: Press relations/Euler Hermes group: Raphaele Hamel, +33 (0)1 4070 8133, raphaele.hamel@eulerhermes.com; Agence Rumeur Publique: Salima Ait Meziane, +33 (0)1 5574 5223, salima@rumeurpublique.fr
EULER HERMES CANADA - More on this organization

http://www.newswire.ca/en/releases/archive/January2009/15/c8011.html