See risk appetite back in mkt by mid-Feb 09: nabCapital

Nick Parsons, Head-Markets Strategy, nabCapital, said he is happy about the way market is responding to bad news. I am happy that it is not making fresh lows; rather it has been able to eke out some positive gains. According to Parsons, the return of risk appetite may come around the second or third week of February.
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Dec 11, 2008, 09.31 PM | Source: CNBC-TV18

See risk appetite back in mkt by mid-Feb '09: nabCapital

Nick Parsons, Head-Markets Strategy, nabCapital, said he is happy about the way market is responding to bad news. I am happy that it is not making fresh lows; rather it has been able to eke out some positive gains. According to Parsons, the return of risk appetite may come around the second or third week of February.

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See risk appetite back in mkt by mid-Feb 09: nabCapital

Nick Parsons, Head-Markets Strategy, nabCapital, said he is happy about the way market is responding to bad news. I am happy that it is not making fresh lows; rather it has been able to eke out some positive gains. According to Parsons, the return of risk appetite may come around the second or third week of February.

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Nick Parsons, Head-Markets Strategy, nabCapital

Nick Parsons, Head-Markets Strategy, nabCapital, said he is happy about the way market is responding to bad news. I am happy that it is not making fresh lows; rather it has been able to eke out some positive gains.

 

According to Parsons, the return of risk appetite may come around the second or third week of February.

 

Here is a verbatim transcript of the exclusive interview with Nick Parsons on CNBC-TV18. Also watch the accompanying video.

 

Q: What is the mood in the European markets? The slight bonhomie that was triggered by the US auto bailout package seems to have worn out. What really is the mood? Are you expecting significant downsides? Is that positive risk appetite, which appeared to be entering not living up to early promise?

 

A: It is always interesting listening to Governor Subbaraos comments. He mentioned the significant crisis that markets are facing. His comments have been echoed, because whilst he was speaking, the ECB President Jean-Claude Trichet was using the phrase that these are extremely challenging times.

 

So, it is a significant crisis if you are in India, and it is extremely challenging if you are in Europe. What we are seeing is that central bank governors around the world are essentially giving the same message to investors, individuals, and to companies.

 

The mood in Europe is actually not too bad at the moment. It is certainly the case that we are opening a little lower. Markets across Europe, from Frankfurt, Paris to London are opening around 0.5% lower. We are down around between 20-40 points on most of the major indices.

 

But, it is worth bearing in mind that the month-to-date performance as we are on December 11. So far, looking at the month as a whole, all the European markets are actually still in positive territory. The FTSE is up 1.4%, the DAX is up 2.3%.

 

I am actually encouraged by that performance. Yes, there are some nerves about the economic outlook. Those are understandable. But, I am rather encouraged by the way in which the market is responding to bad news,. which means it is making fresh lows. It has been able to eke out some positive gains.

 

So, I am actually modestly encouraged by what we are seeing in terms of price action right now.

 

Q: Are you also encouraged by what you are seeing in the credit markets? Do you think that there is a wee bit of return of risk in that market as well?

 

A: I dont yet think there is a return in risk appetite, because we are about 12-13 trading days away from the year-end. I think that the return of an appetite for risk is probably going to come around the second or third week in February. That is when the banks that have their calendar year-ends on December 31, will be publishing the results.

 

Our belief and our expectation is that those banks that are going to fail probably have already done so. Once we can get to the early part of February, wed breathe a sigh of relief that there havent been further high profile casualties. I think it is from that moment, that the credit markets start to free up. I think we start to return if not to the way that the markets used to trade, but certainly I think there will be a period of calm. I think we will see more activity both from issuers, borrowers and investors.

 

But, I would be looking for that more to be in the second-half of February than the second-half in December.

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