Quality Speaks For Itself

Bottom of the market?

Posted in Financing by Ash on August 4th, 2008 10:56am

Many people are starting to question whether we are approaching the bottom of the market. I believe that we are close to the bottom but not quote there yet, In the next 6 months, market conditions will remain broadly similar to what we are experiencing and I believe that we will see one more poor reporting season from the banks. However, in the first quarter 2009, the election of a new American President, Barack Obama (?), will undoubtedly be a catalyst to inspiring trust and confidence which I believe is missing in the market at the moment.

With a new President comes a new economic policy. By that stage America will have been in a 2 year downturn. The Americans that I know will undoubtedly be saying that is enough and that it is “Time to pull ourselves up by our boot straps and get on with it”

In the first quarter, banking balance sheets will be returning to normal and pre crunch. Expect to see a higher degree of liquidity than before the crunch with more confidence returning to the banking sector and the world’s number one power getting back in the driving seat. Also expect trading conditions to improve and a return to securitisation which will both help and support lenders balance sheets thus also bringing some competition to the market which is greatly needed. So, I would predict the beginnings of the norm to return towards the end of the first quarter 2009, with the norm returning in the second quarter of 2009. One caveat to this though is that it will not be the norm of 2006, 2007, but the norm of 2003, 2004, 2005.