Markets Review

Markets Review

World equity markets have fallen back substantially over the past month. The trigger for this was problems in sub prime mortgages which led to several hedge funds having to liquidate and the failure of investment banks to sell on the debt of Alliance Boots and Chrysler. This will make private equity finance more expensive in future which reduces the price they can pay.

The mature markets of USA, UK and Europe were not overvalued before the fall and now look good value, although the crisis may reduce growth in the coming year. It is likely that volatility will continue for the next couple of months which will create good buying opportunities.

Japan has been a poor market, but there are signs that this may be changing and the yen has at least stopped falling in value against other currencies.

Fixed interest capital returns, after being negative for most of the year, have shown some recent strength. However, with interest rates possibly still increasing in Europe and the UK, we do not see much further upside.

Although commercial property provides a good income stream we expect little or no capital growth from this area in the near future.