'US likely to lead the way out of recession'

AN investment analyst believes that the US is likely to lead the way out of the recession that has crippled the world.

AN investment analyst believes that the US is likely to lead the way out of the recession that has crippled the world.

Marriot chief executive Simon Pearse made a passionate plea to investors not to write off America.

He highlighted that the US still offers some of the most reliable income streams for investors at attractive prices.

Pearse said the US is by far the largest economy in the world, making up 30percent of stock market capitalisation and 28percent of Gross Domestic Product, followed by Japan with 8percent and China at 7percent.

"The biggest and best known multinational companies leading global industries still tend to be American," Pearse said.

"Think of General Electric, Boeing, Microsoft, Pfizer, DuPont, Johnson and Johnson and Coke to name a few."

He said America has led the world into a recession of the past three years and is likely to lead the way out.

"In terms of the financial crisis of the past year, the American stimulus package equates to about 5percent of GDP, which when compared to China at 12percent of GDP, suggests that the US is not necessarily bearing the brunt of it," Pearse said.

He said the total global banking write-offs of $1,6trillion (about R12,7trillion) has been borne by banks around the world, particularly the United Kingdom and Europe.

"Much of this related to US securitised debt that has funded American homes."

US Dollar remains the largest and most traded currency in the world.

In recent years it has depreciated considerably against most other currencies, the Euro in particular, which cost $1 in 2002 and today will cost $1,48.

"There is no good reason to assume that this trend will continue," he said.

Pearse said if one is looking to invest in the most reliable dividend streams in the world at the most attractive prices "we have seen in 20 years, these may be found in the mega cap multinational companies, mostly American, British and European".

"The likes of AT & T, DuPont, General Electric, Pfizer, Verizon, Unilever, British American Tobacco, British Petroleum and Vodafone are really worth considering," Pearse said.

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