Jobs & Money: Money: Risk and return: Why cash would have been safer: Risk and return: The UK economy may be strong but this is small consolation for those watching their shares tumble, says Robin Stoddart

• Published in: The Guardian (London)
• Main Author: Stoddart, Robin
• Format: Newspaper Article
• Language: English
• Published: London (UK) Guardian News & Media Limited 24.03.2001
• Subjects: Economic conditions; Investments; Investors; Securities markets; United Kingdom; UK; United Kingdom
• ISSN: 0261-3077

So far, the blame for the se vere fall in share prices falls entirely on the sudden downturn in US output. The official line that Britain and Europe need not be badly affected is losing credence. The consensus still is that we should be fine for some months, given the strength of government finances and the employment market. Ahead of the election, the government certainly hopes so. But further ahead recession will almost inevitably extend to the UK if the statistics confirm that it already afflicts the US. American companies are a vital ingredient in the health of the UK economy. Mercifully, they are still spending on new facilities in some of the most needy areas. There need be no universal crisis of confidence while there is such support for job creation. Where prices have fallen below the value of underlying investments, as in a few of the specialist European investment trusts, they may be said to be cheap. This barely applies to the best recent performer Fidelity European Values, which had achieved growth of around 15% over the last year. Shares of the previous top performer TR European growth are also priced closely in line with underlying holdings. But recent poor performers, such as Perpetual European and Gartmore European, which have suffered from the slide in telecommunications issues, particularly Ericsson and, before its recovery against the trend in the last week Nokia, are now priced at large discounts. Yet Nokia, Finland's giant that dominates its stock market and has been a favourite investment for international funds, is still achieving growth well into double figures. Ericsson shares have been further weakened by the fall in the Swedish currency.