• The recent gains in equities are due to a change in sentiment and investment horizons after the wa...
• The recent gains in equities are due to a change in sentiment and investment horizons after the war on Iraq. Investors are now prepared to take a longer-term view of 12-18 months.
• Reports from the market and CEOs suggest the economic situation is not getting worse. The economy has bottomed and we will see an improvement in earnings in 2004 and 2005.
• Further easing in monetary policy is likely this year.
• Small and mid cap performance depends on GDP growth, which the UK is likely to deliver in 2004, thus sustaining the market rally.
• Companies have been cutting their cost base so that even a small increase in volumes will result in a rise in earnings.
• UK companies can be expected to deliver high single-digit returns and high dividend cover.
• Corporate activity such as mergers and acquisitions are likely to increase in the smaller companies arena.
Bought plans in 1988 and 1989
To be added to model portfolio service
Launched 25 September