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>> The Bank of England and the Fed in the USA have maintained official interest rates at low levels signalling their intention to continue with this policy to help stimulate their economies, rather than tackle inflation.
>> In the USA, unemployment numbers reduced again whilst output and confidence in the manufacturing sector have also increased for a second consecutive month.
>> Chinese States are setting the minimum wage rates for the coming year and these are being increased again at levels which reflect the high level of growth in their economy. These levels have substantially increased over the last few years relative to the developed world. As an example, the minimum wage in Shenzhen |
(which neighbours Hong Kong) was introduced in 2004 and at that time the minimum wage in the USA was 12 times higher, now the USA minimum wage is 4 times higher.
>> Banks are under increasing pressure around the world to strengthen their reserves, which reduces their capacity and willingness to lend. In addition, until the Eurozone crisis is finally resolved, there is uncertainty regarding the actual strength of banks in Europe as their assets may be subject to loss in the event of a member country defaulting on its debt.
>> The FTSE100 had a good start to the year and went from 5,529 on Friday 9 December to 5,649 on Friday 6 January.
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>> The Bank of England and the Fed in the USA have maintained official interest rates at low levels signalling their intention to continue with this policy to help stimulate their economies, rather than tackle inflation.
>> In the USA, unemployment numbers reduced again whilst output and confidence in the manufacturing sector have also increased for a second consecutive month.
>> Chinese States are setting the minimum wage rates for the coming year and these are being increased again at levels which reflect the high level of growth in their economy. These levels have substantially increased over the last few years relative to the developed world. As an example, the minimum wage in Shenzhen |
(which neighbours Hong Kong) was introduced in 2004 and at that time the minimum wage in the USA was 12 times higher, now the USA minimum wage is 4 times higher.
>> Banks are under increasing pressure around the world to strengthen their reserves, which reduces their capacity and willingness to lend. In addition, until the Eurozone crisis is finally resolved, there is uncertainty regarding the actual strength of banks in Europe as their assets may be subject to loss in the event of a member country defaulting on its debt.
>> The FTSE100 had a good start to the year and went from 5,529 on Friday 9 December to 5,649 on Friday 6 January.
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PREST’S HOUSE VIEW FOR THE
NEXT SIX TO TWELVE MONTHS
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POSITIVE VIEW
Equities – Strong companies with good dividend records are particularly attractive..
Corporate Bonds – These continue to be good value compared with cash and Gilts.
NEUTRAL VIEW
Goverment Bonds – The Bank of England has been buying Gilts in order to push up their prices and reduce the interest rate on them. This has been so successful that Gilts are now very expensive.
Cash - Government policy in the UK and the USA is to keep interest rates on cash low for the foreseeable future. However, cash still serves as a short-term safe haven.
NEGATIVE VIEW
Equities – Smaller companies those with large borrowings are vulnerable to their credit being reduced and to high interest charges being imposed.
Commercial Property – The lack of funding for property investors will continue to dampen demand.
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POSITIVE VIEW
Equities – Strong companies with good dividend records are particularly attractive..
Corporate Bonds – These continue to be good value compared with cash and Gilts.
NEUTRAL VIEW
Goverment Bonds – The Bank of England has been buying Gilts in order to push up their prices and reduce the interest rate on them. This has been so successful that Gilts are now very expensive.
Cash - Government policy in the UK and the USA is to keep interest rates on cash low for the foreseeable future. However, cash still serves as a short-term safe haven.
NEGATIVE VIEW
Equities – Smaller companies those with large borrowings are vulnerable to their credit being reduced and to high interest charges being imposed.
Commercial Property – The lack of funding for property investors will continue to dampen demand.
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