We are half way through the global financial crisis but three key events must occur before any real recovery can begin, according to a world-renowned consultant on the influence of politics and policy on financial markets.
Dr Philippa Malmgren, president of the London-based Canonbury Group and an adviser to Deutsche Bank, believes 2009 will see the beginning of another bull market, however not before several issues are resolved.
“We still have to address the as yet un-revealed losses in property (as distinct from sub-prime), and credit cards and corporate debt,” she said.
“The equity markets have not finished their adjustment to a world where the cost of capital will be much higher.
“And the bond markets have not adjusted to a world with higher inflation.”
Dr Malmgren said she was already looking for opportunities to best position herself for the “next big five-year run”, but expects the pace to remain slow for another two years.
“The early stages of the next bull market will start in earnest in 2009 but no one will believe it for several years because the most important activity will occur in the realm of private equity,” she explained.
“It is only later in the cycle that the public capital markets [will] reflect and express the optimism.”
Courtesy of DWS Investments, Dr Malmgren is the opening keynote speaker at the PortfolioConstruction Conference 2008 (August 27/28) and will discuss the key global political and policy issues affecting financial markets and the global economy into the future.
