Monday, 24 December 2012 10:22
2013 positive for equities but UK recovery will remain slow says Fidelity
Fidelity Worldwide Investments believes equities should offer good growth potential in 2013 but that economic recovery in the UK will still be bumpy.
It said there were an "abundance" of under-valued companies with good growth which people were ignoring.
This was accompanied by European Central Bank head Mario Draghi's commitment to buying European government debt. The firm said much of the recent economic volatility had been driven by concerns about the European debt markets.
Alex Wright, manager of the Fidelity UK Smaller Companies fund, said: "The good news here is that I have been able to find plenty of undervalued companies in different parts of the market. Some of these are distressed situations but some of them are good quality businesses that the market has ignored.
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"Additionally, I think the conditions are perfect for M&A activity with record low interest rates, strong corporate balance sheets in large caps, bargain valuations in small caps and the economic environment is rewarding those organisations that can operate at maximum scale and efficiency."
However, 2013 would not be free from problems with a series of possible "mini-crises" occurring. These could include flare-ups in the Eurozone, stalemate in the US fiscal policy discussions and political instability in the Middle East.
Aruna Karunathilake, manager of the Fidelity UK Select fund, said: "I expect to see a continuation of the slow, bumpy recovery in the developed world contrasted with faster growth in emerging markets where long-term fundamentals are better. "We are likely to see periodic flare-ups in the euro crisis and volatility stemming from high debt levels in the US and UK. High leverage in the system, particularly the public and financial sectors, means economic volatility is here to stay and various mini "crises" will most likely be followed by money printing and eventually, inflation."
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It said there were an "abundance" of under-valued companies with good growth which people were ignoring.
This was accompanied by European Central Bank head Mario Draghi's commitment to buying European government debt. The firm said much of the recent economic volatility had been driven by concerns about the European debt markets.
Alex Wright, manager of the Fidelity UK Smaller Companies fund, said: "The good news here is that I have been able to find plenty of undervalued companies in different parts of the market. Some of these are distressed situations but some of them are good quality businesses that the market has ignored.
{desktop}{/desktop}{mobile}{/mobile}
"Additionally, I think the conditions are perfect for M&A activity with record low interest rates, strong corporate balance sheets in large caps, bargain valuations in small caps and the economic environment is rewarding those organisations that can operate at maximum scale and efficiency."
However, 2013 would not be free from problems with a series of possible "mini-crises" occurring. These could include flare-ups in the Eurozone, stalemate in the US fiscal policy discussions and political instability in the Middle East.
Aruna Karunathilake, manager of the Fidelity UK Select fund, said: "I expect to see a continuation of the slow, bumpy recovery in the developed world contrasted with faster growth in emerging markets where long-term fundamentals are better. "We are likely to see periodic flare-ups in the euro crisis and volatility stemming from high debt levels in the US and UK. High leverage in the system, particularly the public and financial sectors, means economic volatility is here to stay and various mini "crises" will most likely be followed by money printing and eventually, inflation."
• Want to receive a free weekly summary of the best news stories from our website? Just go to home page and submit your name and email address. If you are already logged in you will need to log out to see the e-newsletter sign up. You can then log in again.
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