January 2010
The FTSE All-Share Index increased by 4.3% in December on a total return basis closing at a
yearly high aided by continued reassuring global economic data and the decision by Abu Dhabi
to bail out Dubai World. The FTSE SmallCap Index underperformed both the FTSE 100 and 250
Indices over the month, a function of its greater domestic exposure. From a sector perspective,
autos and tobacco outperformed, while banks and general retailers lagged.
Outside the UK economic data was generally positive, although it remained mixed
domestically. Third quarter GDP was revised up marginally to -0.2%. The Monetary Policy
Committee maintaining both interest rates at 0.5% and the scale of quantitative easing at
£200bn. CPI inflation increased to 1.9% in November partly due to petrol price inflation. On a
positive note, the unemployment claimant count unexpectedly fell in November and both the
manufacturing and services PMIs remain in positive territory.
There were no trades during the month.
Although conditions remain very accommodative, at some stage both monetary and fiscal
stimuli will need to be withdrawn and in a number of cases reversed. We remain cognisant
that the market may not necessarily be factoring in the full implications of this. We believe
that volatility is likely to remain a significant characteristic of the market, however, where
opportunities present themselves we will continue to add to our holdings which we believe are
attractively valued and maintain strong business models.
Source: Monthly Factsheet Aberdeen Asset Managers Limited