Guy Monson, investment head at Sarasin & Partners in London (who manage the Nedgroup Investments’ Global Balanced Fund), says that the current fiscal stance is good for markets. He expects that the share prices of big companies should deliver solid returns following the credit crisis going forward.
Monson says the value of shares in the US is now the lowest the past 13 years and in the UK the weakest the past 38 years.
In the UK, he says that a recovery in the share market will however depend on what the central bank does. If interest rates are lowered – and judged by the state of the property market, there is little choice – share prices will rally.
Corporate profits are still increasingly (robust), dividend payments are being hiked and cash flows are strong.
On top of that he says that portfolio managers are sitting on big heaps of cash and are ready to move at any sign of a recovery. Monson reckons the managers now have the same levels of cash as in 2003, just before the rally on the share markets started.
He is also positive about emerging markets and say that these markets offer outstanding opportunities. He plans to increase his exposure to these markets by mid-2009. What do you think? Is he onto something or is he using a banned substance?
Remember that it is often the best time to buy share when all hope of an upturn finally seems to have been dashed.
