>FLASH ECONOMICS (ECONOMIC RESEARCH)

A few long-term strategic questions for investors

We believe that investors' long-term thinking should concern the following questions in particular:

■ will inflation trend upward from the present low, due to the gradual rise in commodity prices and the gradual disappearance of the disinflationary effect of the emerging markets? The answer is probably positive, even if this is a very slow process, hence the idea of structurally weak bond performance;

■ will there be a transfer of growth, economic clout and financial soundness from major OECD countries to emerging countries? The answer is likewise probably positive, hence the idea of substitution of emerging-country securities (public and private) for those of OECD countries, as emerging-country risk is becoming lower than that for the major OECD countries;

■ will there be a long-run deterioration in the financial position of governments in OECD countries which could go as far as default, due to an uncontrollable build-up of public debt (as a result of lower growth and population ageing)? The answer is again probably positive, hence the gradual loss of the risk-free status of these countries' government bonds, and a very different view of the hierarchy of issuers and interest rates.

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