Related News
Housing to lead US recovery: Legg Mason
By Lydia Chen |
October 26, 2011, Wednesday
|
Online Edition
Online Edition
THE next economic recovery in the United States is likely to be led by housing, which could in turn spark a bull stock market – meaning shares are now at their historic low valuations, said Legg Mason Capital Management in Shanghai today.
The struggling US housing market has already showed some improvement with the National Association of Home Builders Index for October showing the largest one-month gain since April 2010, according to the firm that had assets worth US$643 billion under management at the end of August.
Besides the recovery in the housing market, macro economic data, corporate earnings and stock valuations also indicate that securities markets are likely to bottom out.
Although not a robust recovery, the US economic activity is accelerating with its real gross domestic product expected to climb to 2 percent in both the third and fourth quarter following a 1.3 percent growth in the second quarter and 0.4 percent in the first quarter.
Meanwhile, the performance of stocks in the US market has diverged sharply from actual corporate results, which show stability to improvements in most cases, said Mary Chris Gay, Portfolio Manager at the Baltimore-headquartered investment management firm, at the briefing.
"We'll learn more in the coming weeks as companies report third-quarter earnings, but so far most companies' reports showed their results are stable," Gay said.
The S&P 500 is down almost 11 percent from its May 2011 peak, which Legg Mason perceived a reasonable amount of earnings deterioration already reflected in current prices.
"Unless the economic situation deteriorates further, the market is set for a big reversal," said Gay. "It may not require good news. It may only require an absence of bad news," she added.
The struggling US housing market has already showed some improvement with the National Association of Home Builders Index for October showing the largest one-month gain since April 2010, according to the firm that had assets worth US$643 billion under management at the end of August.
Besides the recovery in the housing market, macro economic data, corporate earnings and stock valuations also indicate that securities markets are likely to bottom out.
Although not a robust recovery, the US economic activity is accelerating with its real gross domestic product expected to climb to 2 percent in both the third and fourth quarter following a 1.3 percent growth in the second quarter and 0.4 percent in the first quarter.
Meanwhile, the performance of stocks in the US market has diverged sharply from actual corporate results, which show stability to improvements in most cases, said Mary Chris Gay, Portfolio Manager at the Baltimore-headquartered investment management firm, at the briefing.
"We'll learn more in the coming weeks as companies report third-quarter earnings, but so far most companies' reports showed their results are stable," Gay said.
The S&P 500 is down almost 11 percent from its May 2011 peak, which Legg Mason perceived a reasonable amount of earnings deterioration already reflected in current prices.
"Unless the economic situation deteriorates further, the market is set for a big reversal," said Gay. "It may not require good news. It may only require an absence of bad news," she added.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
