Barack Obama's stimulus package could lead to a turnaround with some firms - with earnings expected to recover by the end of the year.
"Decent returns" can be achieved by savvy investors this year, despite the barrage of gloomy recent financial news and the likelihood that the downturn will get worse before it gets better.
This optimistic note was sounded in the latest analysis from Ignis Asset Management. Terry Ewing and Alison Porter, co-managers of the Ignis Asset Management American Growth Fund, said that earnings would bottom out by the middle of the year and that mergers and acquisitions will experience growth thereafter.
Stock markets around the world have plunged over the past fortnight - with one global index showing eleven straight days of retreats. Continuing downwards pressure from the credit crisis, concerns over bank solvency and the negative market reaction to US president Barack Obama's stimulus package and bank rescue package have all deepened the malaise.
However, the Ignis analysis indicated that firms set to benefit from the US stimulus, along with "low-end" stocks such as Wal-Mart and McDonalds, will blaze a trail in American stocks in 2009. The expected increase in M&A business was also predicted to come about due to companies looking for new ways to grow despite tight credit conditions.
Ms Porter commented: "2008 was not a great year for stock pickers - it was all about sector positioning. This year we expect the market to discriminate and it will be a much better environment for fund managers seeking to add value through stock selection."
