UK - Difficult first half of year forecast for shares

While Morley believes equities are oversold from a technical perspective, we recognise the early part of 2008 is likely to be a difficult period for shares. The risks are particularly acute given that global earnings are approximately 50% above their long-term trend. As a consequence our portfolios started 2008 with an overall defensive bias. UK shares have lost significant ground since the turn of the year, with the FTSE 100 and FTSE All-Share indices both down 13% to 22 January. Mining, retailers and banks have been among the worst-hit sectors. Starting 2008, our preferred sectors inc...