'A great opportunity to buy equities will emerge'
Shares will stage "a very strong and sustained rally" if a solution is found to the debt crisis, according to a senior investment strategist.
Shares will stage "a very strong and sustained rally" if a solution is found to the debt crisis, according to a senior investment strategist.
3:55PM GMT 06 Dec 2011
25 CommentsEven a break-up of the eurozone would provide a good opportunity to buy equities, said Ted Scott, the director of global strategy at F&C Investments.
"With each emergency summit proving to be more disappointing than the last, investors have lost faith in the eurozone policy-makers to provide a solution that will work," he wrote in a research note under the heading "A great opportunity to buy equities will emerge".
"This has contributed to a collapse in investor sentiment with fear the overriding emotion in today's markets."
But he added: "If a satisfactory solution for the debt crisis were to be found, the reversal in investor sentiment could contribute to a very strong and sustained rally."
Mr Scott said he doubted that the eurozone would survive in its current form, but that even a break-up of the bloc would be a positive "end-game" for investors.
"I believe the end game is moving towards some form of break up in the Eurozone and this will be the catalyst that provides an attractive entry point for equity investors," he said. This was despite his assessment that "the risk of a second global recession and financial crisis, at least as bad as 2008, cannot be discounted".
He said the valuation for equities was "low from a historical perspective". "The dividend yield on most markets is high, especially against government bonds for AAA-rated countries. When dividends yield more than bonds it is traditionally a strong buy signal that has rewarded investors handsomely."
http://www.telegraph.co.uk/finance/personalfinance/investing/8938388/A-great-opportunity-to-buy-equities-will-emerge.html
http://www.telegraph.co.uk/finance/personalfinance/investing/8938388/A-great-opportunity-to-buy-equities-will-emerge.html