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Market research | 29
Market research
from Internaxx
September 2009
This section is brought to you by the Luxembourg
based online broker Internaxx. Market analysis is
provided by Fortis Investments, the asset
management arm of the BNP Paribas Fortis group.
Recovery sustainability remains in question
(source: Fortis Investments)
number of voices are starting US recession is over as they need more evidence If the economy falls back early next
A
to suggest that the global that the economy will not lapse back into year, the NBER will not call an end to the
recession is over. Although the recession after a short government- and recession for several quarters. Meanwhile,
US economy shrank again in inventory-driven rebound. for the countries in the eurozone, the
the second quarter, growth decomposition into GDP components
accelerated in China, while a The end of the global recession? such as consumption and investment is
number of other Asian Based solely on GDP figures, for several not yet available for the second quarter, so
economies registered impressive growth countries the recession ended in the second we do not know if this was just an inventory-
figures after heavy declines in previous quarter, including Germany and France, while driven rebound or a more sustainable
quarters. The eurozone economy shrank China and South Korea never entered improvement. Leading indicators are
overall in the second quarter, but more recession in the first place. recovering in a normal manner, but from
encouraging was that the German and Compared to earlier episodes, several extremely low levels. It is therefore possible to
French economies grew slightly over this leading indicators, such as the US ISM and argue that they should recover more strongly
period. German Ifo, are pointing towards a normal than normal.
Indeed, it does appear to be the case that the recovery. In that sense it looks justified to
global recession has come to an end. However, state that the global recession is over, as well Japanese equity rally in the offing
although economic growth could make a return as those in most individual countries. Source: Fortis Investments
in the coming quarters, it is likely to be mostly However, there are some important caveats. Japanese equity markets have mirrored
due to temporary factors such as inventory Economic growth in the US in the second half developments in US equities in recent
rebuilding and government stimulus spending. of the year is likely to be driven primarily by months, as mounting optimism about the US
The strength and sustainability of the recovery temporary factors such as government and Chinese economies have fuelled hopes of
over the longer term remain a concern. stimulus spending and the rebuilding of low an export-led recovery. Moreover, investor
The National Bureau of Economic Research inventories. Over the longer term the sentiment has improved on expectations of a
(NBER)- the US's official arbiter for deciding economy will have to cope with weak growth quicker-than-expected recovery in corporate
whether the economy is in recession-stated in labour income, deleveraging consumers and earnings and investment inflows into Asian
recently that it is too early to proclaim that the huge government deficits. markets.
www.investmentinternational.com September 2009 Investment International
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