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Any
analysis of world stockmarkets is subjective and from 10 experts
there are likely to be 10 different opinions. |
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We
present here the views of Elizabeth Blythe who is the Investment
Consultant at Blythe Financial Ltd. |
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Whilst
there has only been a small fall in world stockmarkets over
the last quarter, this brings to a conclusion a poor year overall.
The UK equity market has fallen just over 10% in the last twelve
months. NASDAQ in America is now at 50% of its peak level reached
in March 2000. We have witnessed the Technology, Media and Telecommunications
(TMT) stocks retreating significantly from their high valuations.
Meanwhile the defensive stocks of Utilities and Pharmaceuticals
have performed well while the world's stockmarkets have been
unstable. |
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In
America we are now faced with the uncertainty of a new administration.
Interest rates are falling to try and ensure that the economy
has a soft landing rather than entering a recession. Whether
the soft landing will be achieved is still open to debate. |
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In
Europe the economic slowdown is expected to be less than in
America. The weak euro has stimulated economic growth but has
also increased inflation. Company results have been positive
but with the euro now strengthening and valuations higher than
in the UK, Continental stockmarket conditions are now weakening. |
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Interest
rates have remained unchanged in the UK. The stockmarket did
not manage to progress over the last quarter, instead it fell
1%. In October we felt that the UK was now at a more realistic
level and that the stockmarket would begin to move upwards again.
Although this did not happen, it is still our view that current
UK valuations provide scope for capital gains. However, it will
be hard for either the UK or Europe to progress whilst the American
market continues to suffer from uncertainty. We may well see
little direction in the market's movement for several more weeks
but the downside is we feel also limited. |
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Japan
is seeing an economic recovery at the moment but there are still
some concerns that this may well be a false dawn. Although the
share valuations are attractive, standing at ten year lows,
market sentiment continues to be poor. This is still not a market
that we wish to recommend for investment. |
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After
a difficult year in world stockmarkets, we now feel that carefully
selected actively managed funds in the UK and non-market specific
global funds are offering good value on a medium term view.
However, as can be seen from the performance of the Blythe &
Co selected ISA's for 2000, there are winners and losers. This
will always be the case with this style of investment and they
are only suitable for investors who are comfortable with risk
(Iraq might invade Iran!). |
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