Barclays' Henk Potts predicts the exchange to rise by over ten percent next year.
London's flagship FTSE 100 stock exchange will climb around 500 points by the end of 2009, with the ongoing recession continuing to provoke negative sentiment among investors.
This is the opinion of Barclays Stockbrokers equity strategist Henk Potts, who has released his next-year forecast. The expert said that the index would finish 2009 on around 4700, just over ten percent higher than today.
However, Mr Potts also warned that earnings would drop by around 20 percent next year as the recession bites, eating into dividend growth. This is because crisis-hit companies are likely to cut or even forego dividends for shareholders in order to free up more funds for their own balance sheets.
"Equity markets will struggle," Mr Potts added. "Consequently, we expect to see further volatility in the first few months of the New Year. Towards the end of the first half of next year, however, we expect the global economy to show signs of stabilisation, meaning that equities - given their forward-looking nature - should start to recover in anticipation of a return to economic growth in 2010."
The FTSE 100 is made up of the 100 largest publicly-listed companies in the UK. Membership of the stock exchange changes regularly, dependent on the size of the firms.
