Q1 progress bodes well for financial markets. (Viewpoint).(first quarter 2002)(Column)

Banker, The, July, 2002 by Hausler, Gerd; Tran, Hung

The economic recovery that began during the first quarter of 2002 has brought improvements in financial market conditions. Mature equity and bond markets have further stabilised. Most emerging market countries continue to have access to international capital markets, and their bond spreads have declined. The near-term outlook thus appears largely free of imminent threats to global financial stability.

However, one important source of uncertainty remains: the recovery and quality of corporate profits in mature markets. In the period ahead, the level of corporate profitability will significantly influence capital expenditure, which so far is the missing component in the current recovery.

Questions surrounding the quality of reported corporate profits, in...

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