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Recovery still fragile says Aberdeen
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Australian investors have been warned to be cautious moving into 2010 because the economic recoveries underway in Japan, Germany and the US are still fragile and dependent on government spending, according to Aberdeen Asset Management’s head of global equities, Stephen Docherty.
Docherty used a visit to Sydney to say that the rise in global equity markets over the past six months could be characterised as a celebration that the world did not go into an economic meltdown in 2009.
However, he said the real test of the sustainability of the rally would come in the New Year.
“Next year it becomes much more difficult as governments tussle with the delicate task of removing stimulus without tipping the fragile recovery back into recession,” Docherty said.
He said with unemployment near all-time highs and with consumers focused on repairing their own balance sheets, doubts remained about whether or not they could take up the slack of reduced government stimulus.
AUTHOR
Mike Taylor
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Economists have been left scrambling to recalibrate after the Reserve Bank wrong-footed markets on Tuesday, holding the cash rate steady despite widespread expectations of a cut.
A new Roy Morgan report has found retail super funds had the largest increase in customer satisfaction in the last year, but its record-high rating still lags other super categories.
In a sharp rebuke to market expectations, the Reserve Bank held the cash rate steady at 3.85 per cent on Tuesday, defying near-unanimous forecasts of a cut and signalling a more cautious approach to further easing.
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