Annual Review 2008 - Hyposwiss Privatbank AG

Annual review
2008 will certainly go down in history as one of the weakest
and most challenging investment years ever. The markets
succumbed to sharp price fluctuations, especially in September
and October.
After a number of global financial institutions collapsed, the
financial markets were plagued by uncertainty. Share prices
plummeted, triggering compulsory liquidations of securities
positions held on credit and placing the markets under further
strain. Most equity markets lost nearly 50% of their value in
2008. The Swiss share market got off comparatively lightly with
a loss of 34%. This was mainly thanks to its defensive orientation,
focusing on pharmaceuticals and foodstuffs. Some emerging
markets, however, such as China and Russia, lost two-thirds or
more of their market capitalisation. Meanwhile, many investors
fell foul of tumbling bond markets, losing even more than in
equities. The catastrophe we had previously seen in subprime
paper spread to bonds, which suffered on the back of rampant
uncertainty and the insolvency of some reputable borrowers,
resulting in growing mistrust, dwindling liquidity and rising
credit spreads.
Board of Directors
Roland Ledergerber
Chairman
Dr. Franz Peter Oesch
6 Hyposwiss Annual Review 2008
Dr. Rico Jenny
Vice-Chairman
Stefan Klinger
Such an environment also spawned massive shifts in currency
prices, largely to the benefit of the US dollar and, in particular,
the yen. The euro, however, and the pound sterling lost considerable
ground in the rapidly deteriorating economy.
For the first time in quite a number of years, our portfolio
managers underperformed the benchmark in their management
mandates in 2008. This was mainly due to the use of
certain products that suffered disproportionately from the
collapse of market liquidity. However, despite the adverse
conditions, no mandates suffered complete losses on any
investment.
2008 was also a testing time for SGKB Group investment funds
administered by Hyposwiss Zurich. Some of these took quite a
beating in terms of performance, with investments falling
accordingly from 1.6 billion to 0.6 billion Swiss francs. Nonetheless,
despite the bleak environment, two funds maintained their
positions in the top half of the ranking.
Theodor Horat