The Global Financial Crisis is Over

One of the dealers of the leading countries have boldly declared the global financial crisis over, saying there will be a big change from fixed-income securities in the stock market and property investment in the year come.

Charlie Aitken, director and head of institutional dealing for Bell Financial Group owned by Southern Cross Equities, said in the coming years, was “fantastic” for the stock market.

“The GFC is over. It is over. People parked in fixed interest and bonds are going to miss it,” he said. “There is no doubt in my mind that contagion is over. It is a bit like coming out after a bombing raid — no one wants to say that the bombers is not coming. Confidence will slowly return and people will realise you make money by taking a risk and the risk at the moment is not that high.”

Analysts are generally united in their views that a flat Australian dollar, increased capital spending, an improving US economy and no further rate rises until the second half of this year should underpin a solid performance by the sharemarket.

This is after a tough 2010 that delivered a negative return from the sharemarket for only the third year in the past 16.

However, the impact of the Queensland floods will be felt across corporate Australia in the months ahead and already a spate of companies in the resource and agricultural sectors have issued downgrades to production forecasts.

Queensland Rail revealed on Thursday that it would miss its profit targets because of delays and damage caused by the floods. Despite this, the initial public offerings market is facing its busiest January in several years.

More than 30 companies have live IPOs and 12 are expected to list this month, according to data provided by the Australian Securities Exchange.

“We are raising money for growth projects, not just to recapitalise balance sheets,” Mr Aitken said. “This time 12 months ago, it was just keeping companies from going broke. There is a bit of a perception out there that we have some regulatory and legislative headwinds with a hung parliament and an aggressive competition regulator.

“As those fears ease, I think we could be in for a pretty good year. We are seeing risk capital come back into certain parts of the Australian market quite aggressively from all over the world. It has a far more resilient feel to the market right now than it had this time 12 months ago, where it all seemed to be built on pretty dodgy foundations.”

There are also strong expectations for merger and acquisition activity for the year ahead following a string of deals in the final quarter of last year, including Singapore Stock Exchange’s $7 billion tilt for the Australian Securities Exchange, New Zealand-based Fletcher Building’s aggressive pursuit of Crane Group, and Japan’s Dai-ichi Life Insurance’s $1.2bn bid for Tower Australia. Most bankers also expect greater activity by private equity firms.

Private equity assets expected to make a return to market this year include Pacific Equity Partners’ Hoyts, CVC Asia Pacific’s PBL Media and Archer Capital’s Cellarmasters. The sharemarket-listed Bell Financial Group announced in November that it would merge its Southern Cross and Bell Potter businesses into a single brand from July 1.Bell paid $150 million for Southern Cross in 2008.

“Another reason why we are putting these firms together with some pace is that we want to be in a position to capture that better market,” Mr Aitken said.

Bell wants to move towards a single retail, institutional, research, ECM, and corporate finance offering, which the company believes will be Australia’s pre-eminent full-service, independent, Australian-owned stockbroking business.

Under the agreement, the founder of Southern Cross Equities, Brent Potts, BFG remain on the board as non-executive director. Bell said last week unaudited net profit after tax for the year to 31 December was 21.5 million, 21 percent less than in 2009.