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Copenhagen Stock Exchange: The Equity Market On The Threshold Of 2003

Date 21/01/2003

After three consecutive years with falling share prices there are indications that growth will be moderate and earnings will increase in 2003, Equity Analyst Bjørn Schwarz, Sydbank Markets, writes in Focus no. 37.

In his assessment of the outlook for 2003 the author emphasises that the equity market faces problems such as accounting scandals and accounting standards, including option schemes and pension obligations, falling earnings capacity among the companies, rising geopolitical risks, including Iraq and the fear of terror. At the same time there are early signs that earnings in the American companies are picking up. Many companies have had high expectations at the beginning of a year, which they later have had to readjust downwards. Consequently, Bjørn Schwarz believes that more companies will present moderate forecasts for 2003, and the investors will be more cautious with the forecasts presented in the light of the elements of risk that characterise the trend in 2003.

It will probably be the fiscal and monetary policies that must stimulate growth this year. It is uncertain how the equity markets will react to the implemented and expected stimuli, however, since Bjørn Schwarz expects the companies to increase earnings, he also expects the economic growth to pick up in 2003. The reductions that the pensions industry has made in their portfolios of shares have now come to a halt, and this means that the swamp of shares is declining, arresting the price-cutting. For 2003, the author recommends a neutral share position, perhaps with a predominance of health-based and selected technology shares.

Read the entire article "The equity market on the threshold of 2003" in Focus no. 37 by Equity Analyst Bjørn Schwarz, Sydbank Markets, on the Copenhagen Stock Exchange's website www.xcse.dk.

Questions to the author may be sent to the e-mail address info@cse.dk until 24 January 2003.