Today marks the anniversary of the FSA's letters to heads of insurance companies, inviting them to apply for waivers on minimum solvency requirement rules and head off the threat of a complete UK stockmarket collapse.
The FSA would, of course, never admit that was the intent behind the letters, but with reports suggesting some insurers were actually making more money by shorting stocks than going long, it was clear that a downward spiral had to be averted.
The FTSE 100 index did crash another 165.7 points to close at 3,287 on 12 March 2003, the day after the letters were sent, but from there on in it has been plain sailing for the masters of UK pension funds and other institutional investors.
Arguably, the FSA that day did a favour to all 13 million UK retail investors, and the millions of others who hold shares indirectly on a collective basis.
One year on, having been through war, the threat of a highly contagious disease – SARS – and the near collapse of the government over manipulation of WMD facts and figures, the question remains whether the letters or the waivers were needed, and if so whether the market again requires another jolt of confidence.
Whether by fate or irony, Thursday 11th March 2004 also happens to be the day the markets got another wakeup call about the uncertainties terrorism can bring to the party.
Some statements in the past 24 hours point to factors that could easily upset the markets further, undoing some of the massive gains made in the past 12 months, and putting equity investments on the back burner again.
The Centre for Economic and Business Research points to continued difficulties predicting the direction of the US market, the biggest and most important in terms of dragging the global economy along.
The dollar weakness should have helped US firms, but the CEBR says the figures show it is not helping to close the US trade deficit.
"An increase in imports of industrial supplies and materials has continued in January from December 2003 despite an overall decline in imports, as high domestic demand for these goods caused by US output growth outweighs weak dollar effect," the Centre says.
"As the economic situation improves across the globe, we may expect higher demand for US exports, and US exporters may benefit from the dollar's weakness."
Legal & General chief economist Andrew Clare says the currency’s volatility is unlikely to go away anytime soon because it is driven by market uncertainties.
In any case, the volatility is actually low when compared to the long-term historical picture. L&G is forecasting the pound will be worth between $1.80 to $1.85 this time next year.
Jobs creation in the US is failing to keep up with forecasts, according to other recent figures, but the CEBR points out that retail and food sales figures for January have been beefed up considerably compared to early official estimates.
Closer to home, a recent AITC roundtable of UK investment trust fund managers revealed some more cautiously optimistic views.
Mark Barnett, manager of the Keystone Investment Trust, says the UK faces the challenges of low rates of economic growth and inflation, coupled with high levels of consumer debt, high property prices and rising levels of taxation.
He expects consumer spending levels could suffer at the same time the government realises it cannot keep up its own heady levels of expenditure. Clearly UK GDP growth could be hit.
Jeremy Wells, manager of the JPMorgan Fleming Mid Cap investment trust is a little more hopeful the consumer and housing markets will maintain appearances, while the Bank of England will be dissuaded from raising interest rates too far too fast by the high levels of personal debt.
Nick Train, manager of the Finsbury Growth Trust investment trust is more positive still, expecting equities to return between 6% to 7%.IFAonline
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