Investors Accepting Recession Reality - Hang Seng Financial

Online, February 12, 2010 (Newswire.com) - Hang Seng Financial: HONG KONG - In a monthly market report to clients, "Hang Seng Financial" analysts have apparently suggested that investors are slowly but surely coming to terms with the fact that a sustainable and strong economic recovery is unlikely.

A stream of disappointing economic data, combined with overwhelming evidence that it is cost-cuts that are fueling company profits rather than increasing revenues, is changing sentiment among investors who heeded mainstream commentary suggesting developed economies could rebound quickly from their recessions.

Delinquencies among prime mortgage borrowers in the US have surpassed those of subprime borrowers for the first time ever and almost 10% of all mortgages in the US are now delinquent adding downward pressure on real estate values that have been in decline for over 3 years.

Hopes that China would lead the world out of the slowdown were recently dashed after the People's Bank of China said it was tightening credit to discourage investment in asset bubbles.

The firm maintains its view that, with consumers in the West hamstrung by debt, it is unwise to count on their making any meaningful contribution to their respective GDP figures in the months going forward.

The general consensus among "Hang Seng Financial" analysts is that the recovery will be W-shaped and laborious.