US - Fund managers are upbeat about the prospects for US equities and expect firms to post double digit profits growth figures for 2002.
The forecast comes against a backdrop of market volatility in the aftermath of the September 11 attacks last year and a series of accounting scandals.
Investor confidence has also been undermined by firms, including AOL Time Warner and Xerox, having to restate their 2001 and 2002 profits figures and lower their future expectations.
But UK’s Britannic Asset Management fund manager Terry Ewing believes US firms will enjoy a massive upswing at the start of the year.
He said: “US companies should achieve double-digit growth because the economy ground to a halt after September 11. It’s relatively easy for them to outperform the profits growth they delivered at the end of last year.”
Tilney Investment Management director Peter Bickley agreed, but he warned that looking at US figures was “dodgy territory” due to the distrust that greets company reports.
However, he added: “Even if you adjust for that there will be a double figure bounce in earnings.”
Schroder Investment Management chief economist Keith Wade also believes US firms are in a good position because of post-September 11 cost-cutting.
And he points out that significant write-offs from mergers and takeovers in the bull market years are no longer on companies’ balance sheets.
Wade said: “The headline numbers, the reported earnings numbers – with the write-offs dropping out – are looking much better.
“So you could actually get the double digit growth. It’s not impossible, surprising as it may seem.”
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