We expect increased focus by corporations and appreciation by investors of our long favored positioning in favor of quality. In financial scandal, it is worth reflecting upon the utilities and the telecommunication service companies immediately before and after the 2000 market peak. Both industries were globally of mixed private and public ownership. Scandals such as Enron and Global Crossing did erupt, increased regulation developed and severe restructuring followed. However, well positioned utility and telecomm services entities subsequently in market recovery were amongst strong performers. We look at the strong financials as likely market leaders in a similar context. Generally, the late February earnings cuts onwards likely lay the groundwork, alongside corporate focus on efficiency, for classical positive surprise later for a new cycle both of earnings and markets. A risk is that contrary to government and central bank officials and notwithstanding leadership action by compatriots during past decades, corporate chieftains seem strangely reticent which requires to change. We believe bifurcation in favor of quality has further to go. We favor such companies in the financials, in information technology, in industrials and increasingly in energy as exercising sector market leadership.
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