Evidence, not proof

Article Abstract:

Critics argue that the United Kingdom stock market takes too short term a view of investment. This view is expressed in a study by the Bank of England's Simon Hayes, and Dirk Nitzche and Keith Cuthbertson from Newcastle University. Their claim is based on the markets's treatment of future dividends. Their calculations may be faulty due to their assumption that risk premiums are constant, and there is also no certainty that government intervention would be more efficient than the market.

Economic aspects, Capital investments

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It ain't necessarily so

Article Abstract:

UK interest rates were raised at the end of Oct 1996 and share prices did not perform well after this rise. Share prices tend to underperform in the half year after a rate rise, but UK earnings growth could offset this in 1996 and 1997. The stock market has tended to be affected by rate rises in the 1990s but this could end, according to Richard Davidson from Morgan Stanley, and profit growth could come to be more important for share prices throughout Europe.

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Gilt complex

Article Abstract:

Inflation could represent a greater danger to United Kingdom stock prices than deflation. Inflation means that interest rates will rise, and so will yields for government securities (gilts). A rise in gilt yields affects stock prices more than a change in the prospects for earnings. An interest rate rise is likely to bring a stock market correction, according to Capel-Cure Myers Financial Management's Mike Lenhoff. Earnings downgrades appear less important.

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