The global bear market ended on 21 September, with the period since that time developing into a stea...
The global bear market ended on 21 September, with the period since that time developing into a stealth bull market in world equities, according to Aberdeen Asset Management.
Michael Karagianis, head of strategy at the group, said this bull market could run through the first half of 2002 at least.
'Following such a long bear market, investors tend to acquire a siege mentality, keeping their heads down and investment risks generally low, until good news emerges,' he said. 'However, I believe that investment markets are entering the sweet spot of the investment cycle when a combination of low interest rates, strong liquidity and gradually improving growth expectations support a recovery, particularly in emerging markets and high yield bonds, as well as property.'
This fits with previous cycles where, since the early 1970s, all equity bull market recoveries have begun between two to six months before economic recession ends, he said. This, added to the fact that the creation of free liquidity occurring now, is outpacing any prior period seen since the early 1970s.
Karagianis believes the aggressive response of companies via downsizing and restructuring will add to the support for share prices during 2002.
He said: 'If our global outlook for 2002 is correct and the US emerges from recession in the first half of the year, then the current equity market recovery is happening right on cue. In fact based on market movements since late 2001, the magnitude of market recovery is also in line with historical observations.'
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