Aberdeen says turmoil will last until mid-2009

Damage to US and UK earnings from the credit crisis will not end before mid-2009, according to Aberdeen Asset Management's investment trust team.

Advertising

Bruce Stout, manager of Murray International Trust, said the first stage of the turmoil was still in progress, although global writedowns had exceeded $400bn (£203bn).

He said the second stage had started only recently and would result in retail borrowers deleveraging and living standards declining. According to Mr Stout, companies would probably squeeze profit margins and cut prices to boost demand.

"The earnings declines are unlikely to fully materialise in the US and UK until next year, so we expect numerous poor trading statements over the coming 12 months."

However, Mr Stout did not see a similar deleveraging problem in most of Asia, Latin America or Europe, where he said consumer debt is below 25 per cent of GDP, as opposed to more than 100 per cent in the UK and the US.

"While overall GDP growth may moderate from the blistering pace of previous years, it should still be sufficient to support decent earnings and dividend growth for domestic companies," he said.

FTAdviser BLOGS RSS

Latest Post  

A new way of training

Although we here at Young Adviser have said before that the industry desperately needs 10,... read more

SIGN UP TO NEWS ALERTS



Is the time right for equity release?

Norwich Union is celebrating 10 years of offering equity release (Find out more).

Meanwhile, with house prices plummeting, should clients be signing up to equity release quickly to make the most of the equity in their home?

Click here to read our feature article

FTAdviser  Jobs  RSS

More positions