Investment Management Market Report

2001 from Soft Landing to Recession

2001 has proven an extremely disappointing year for the global economy, and investors alike. The bear market persisted over the whole of the first three quarters, with growth forecasts for all major economies being revised downwards as the year progressed. Previous hopes of a soft landing gradually turned to fears of recession. The horrific terrorist attacks in New York on September the 11th merely amplified what had already been proving a negative year for investors.

However, from the low point reached on September the 21st, markets have staged a significant recovery, as US successes in Afghanistan, low commodity prices, and hopes of an economic recovery in 2002 persuaded investors to return to the equity markets. Although this has allowed the final quarter to close on a positive note, we should caution against expecting this to become a sustainable recovery during the early part of the New Year. It is our view that it will not be until the second half of 2002 that the massive corporate restructuring, and the rate cuts and fiscal policies adopted by the Fiscal Authorities will have a sustainable effect on the investment markets.

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