Economic gloom remains but share market bottom may be close
A leading market economist has said while the outlook for unemployment and the broader economy remains weak, the share market bottom may not be far away.
As part of a market update in Sydney yesterday, the chief investment officer of Zurich Financial Service, Mathew Drennan, said it would likely take the US five years of rebuilding consumer savings before the economy could recover, with the US no longer able to rebuild through consumer spending and the use of debt as it has in the past.
Drennan said unemployment in the US could hit 9-10 per cent, while unemployment in Australia would likely hit 6-7 per cent. He said the fear of job losses in Australia will impact consumer spending and house prices would also be subdued.
But despite the gloom, Drennan believes the share market bottom may not be far away.
Increased regulation and consolidation would be two key themes of the coming year, Drennan said, while the overarching theme of this current crisis has been the precedence of survival over ethics.
Drennan also criticised the government bank guarantee as being a purely symbolic measure that had caused much grief for some sectors of the industry.
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