Hibernian Investment Managers (HIM) one of Ireland’s leading active investors, today launched its investment strategy for 2003.
Hibernian Investment Managers (HIM) one of Ireland’s leading active investors, today launched its investment strategy for 2003. Their FOCUS 2003 report includes a global economic overview and outlines the prospects for bonds, currencies, property, the key equity sectors and geographical equity markets. The key messages are that global growth will remain stable, inflation will stay low, interest rates will rise only modestly (if at all) and equities will outperform bonds in 2003.
Martin Nolan, Chief Investment Officer, HIM, said: “Just a few short words sum-up 2002 – terror, war and Iraq. Financial markets can be summed-up by the words Elan, Enron and Andersen. These few words have significantly impacted on the ingredient that fuels investment markets – confidence. Authorities, especially in the US have reacted to this crisis of confidence, and look like they are willing to do what it takes to assist the economy and stock markets to recover.”
HIM anticipates 2.5% GDP growth rate in the US for 2003 (in line with the likely outcome for 2002), and that corporate investment will take-up the running from consumer spending later in the year. US interest rates are likely to rise by 0.5% (to 1.75%) in the second half of this year. The Irish economy, which is estimated to have experienced a decline in GDP growth to 4.5% in 2002 is likely to slow further to a 3.5% growth rate this year. Inflation will remain an Irish problem, and competitiveness looks set to deteriorate further given changes made in the budget, the strength of the euro and the continued wage-price spiral.
Fiona Adkins, economist at HIM, said: “We envisage a best- case scenario of only 1.6% GDP growth for the eurozone in 2003, and this is flattered by favourable base effects. Germany is very much the sick man of Europe and will restrain eurozone growth for some time to come. A major reason for our lack of optimism is the relative inactivity of the European Central Bank compared to the US Federal Reserve in cutting interest rates to stimulate growth. In addition the appetite for resolving the many necessary structural reforms has disappeared”.
Martin Nolan added: “Market levels now reflect the bad news that emerged during 2002. The current uncertainty about the timing and outcome of any war in the Middle East is keeping investors on the sidelines. Our overall economic view is that global economies will stabilise in 2003, led by the US. The stimuli of low interest rates, lower taxes and higher government spending will take effect this year. We expect profit growth of 8-12% in aggregate for global equities and returns of about 10% for the year. However, the high levels of market volatility experienced in recent years are likely to persist.”
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Press contacts:
Kela O’Riordan, 01 617 8164, 086 606 8842,
kela.oriordan@hibernian.ie
Dara FitzGerald, 01 611 8817, 086 244 8845,
dara.Fitzgerald@hibernian.ie
Notes to editors:
- Hibernian Investment Managers is one of Ireland’s top five fund managers, with current assets under management of almost €7 billion. The company is based in the IFSC.
- Part of the Hibernian insurance Group in Ireland which is part of Aviva plc the fifth largest insurance group in Europe, and seventh globally (based on gross worldwide premia)
- Hibernian is Ireland’s largest composite insurer, ranked first for general insurance and top five for life and pensions
- A photograph is available by ISDN