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W-shaped recovery weighs on investors’ minds: RBS

Posted on 13 Oct 2009 | Comments Off

Economic recovery may be imminent, but there is no consensus on the form it will take.

RBS chief European economist Jacques Cailloux said that after speaking to clients in Europe, ‘investors remain very negative on the prospect of a stable recovery’.

‘We conducted a survey among our investor base a few weeks ago, and the striking answer that came back from that was that about 70 per cent of clients are betting on the ‘W’,’ he said.

Respondents were not asked to give a reason why they believe a ‘W’ or double-dip recession may occur. But Mr Cailloux thinks the possible withdrawal of stimulus packages too soon could be one factor.

RBS’s position, however, is that ‘we are in a recovery phase on the global economy level and we don’t subscribe to the double-dip story. It’s true for the US, Europe and also for the rest of the world’, he said. Continue reading →

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Tagged Economy

Making sense of the recent market rally

Posted on 15 Aug 2009 | Comments Off

One important reason for the bullishness is that the market has already discounted much of the bad news

RECENTLY, one of my clients told me he was confused about the significance of the recent market rally. Many of the blue chips such as Singapore Airlines, NOL, SGX and CapitaLand are still making quarterly losses. On top of that, some 47 companies listed on the Singapore Exchange have announced quarterly results with combined earnings lower than the previous quarter.

On the job front, unemployment is still rising. According to the manpower ministry, the worst is not over yet. This is the first time employment has contracted for two consecutive quarters since the 2003 economic downturn.

GDP for 2009 is expected to contract by 4 per cent to 6 per cent. ‘Aren’t all these bad news for the stock market?’ he asked. Over the last four months, equities have done extremely well with the Dow Jones Industrial Average up 20 per cent; the Standard and Poor’s 500, 23 per cent; and Continue reading →