Investment Market Round-Up

UK

• There are numerous forecasts of what 2010 will hold and maybe the only certainty is that volatility will continue to some extent in all sectors of the market.
• The rally in equities is expected to continue in fits and starts during the first quarter as those sitting on cash look for a better investment return with interest rates remaining low.
• The housing market is not expected to collapse as mortgages remain cheap against reduced supplies of new homes.
• The recovery remains fragile with an election pending and some speculation over the impact of a possible “hung parliament”. 

US

• The outlook is generally better than the UK, with genuine improvements in employment levels and productivity.
• Major companies have now reappraised their situations and adjusted strategy to withstand the economic climate, with mergers and acquisitions strengthening the position of some. 

Europe

• “The road to recovery is icy and hazardous”
• Many banks still need to correct their balance sheets.
• In some regions unemployment is a continuing problem.
• Sovereign debt (the financial liability of a national government) is a potential risk for some regions, such as Greece.  Greece has had its Sovereign debt downgraded by a notable credit rating agency and this could lead to pressure on long term interest rates.
• There is also a threat of a rise in inflation in the first quarter of 2010.

Asia & Emerging Markets

• Infrastructure spending and government projects have stimulated reflationary measures and this has widened the gap between developed economies and emerging markets.
• There is a danger that cash flows into emerging markets could result in excess liquidity and the possibility that authorities could raise interest rates to slow the process.
• Chinese measures to stimulate the economy have resulted in a surge in domestic demand that has offset the decline in exports, making China one of the main regions staging strong economic recoveries. Others include Korea, Brazil, Mexico, Chile and India, with many commentators favouring emerging market equities at present.

Japan

• The weakening of the yen versus the US dollar should support the export sector and equities are likely to enjoy a boost. The yen appreciated due to the Japanese government moving away from Quantitative Easing when others were doing the opposite and the currency is now likely to fall.  

Fixed Interest

• Government Bond yields have remained artificially low due to government fiscal measures.
• Bond yields generally will come under pressure as banks exit monetary policies.
• Investors sitting on cash at present are choosing to invest in equities rather bonds. 
• Relative to government bonds some corporate bonds continue to offer value and flexibility across the sector remains essential for bond investors.
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Conference Feedback

The telephone conference and fund manager investment forums have been rather quiet since the start of the New Year but our diaries are now full and we will be reporting back next month.

Conclusion

We predict that 2010 will be another difficult year. There are many economic variables and political issues to consider, with a very tough budget expected in March followed by the General Election perhaps in May.  There will be very difficult challenges for whichever party is elected.


And finally…

NEW WEBSITE

We are pleased to announce that we have changed our website at www.fraserheath.co.uk.

The new website has the following content:
Description of what we do, how we do it and what makes us different
Description of financial planners and the roles of paraplanners and administrators
Fraser Heath News
A link to a new website - www.money-hub.co.uk.
Resources Page which includes:
Investment Meeting Minutes
Newsletters
Fraser Heath Documents and on-line Guides
2 Calculators (pension and mortgage)
Best Cash Savings Rates
Fraser Heath Videos
Links to useful websites
A link to “FraserHeathIFA” on Twitter
An “about us” page


Date of Next Meeting:  2nd February 2010