Investors Ponder Strategy For 2009
January 26th, 2009
If 2008 was a year investors wanted to forget, will 2009 be any better?
Some may already foresee a pattern of profit warnings, lower net earnings and slashed dividends. Analysts are already saying global equity markets are looking quite cheap. They think investors in 2009 will get back half their losses from around 2008. This implies around a 25% to 30% return for the year. The risk averse may shun the market altogether, preferring the safety of Govt-guaranteed bank deposits. Returns from these are falling sharply and may fall further, if the OCR settles around 3%.
Paraparaumu’s financial guru Chris Lee is predicting a record number of corporate bond issues this year, as banks continue to back off illiquid corporate lending, in preparation of paying back overseas investors. Lee thinks finance companies and banks might be considering a model of matching the terms of their loans, to the terms of their deposits. Then another model might be for listed funds (with no repayment dates) with high yields and maybe profit-sharing terms to replace the old “debenture” model which funded property developments.
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