City Watch: It’s been a year of two halves, says Brian Tora

DECEMBER is a funny month for markets, and thus investors.

Company news tends to be sparse, with a calendar year-end the favourite accounting period for corporations. Trading statements and economic news equally tend to arrive once the New Year starts.

Yet shares have a tendency to rise, possibly because professional investment managers use the festive season to tidy up their portfolios and spend any spare cash left lying around.

Europe has provided its own bit of spice, with the news that Mario Monti is to step aside in Italy and allow Silvio Berlusconi to throw his hat back into the ring. Elsewhere, though, news is at a premium, so perhaps a glance back at the year just ending might be appropriate, given that this is the last opportunity I will have to share my thoughts with you before 2013 is upon us.

2012 started with a feel of promise, given that 2011 had proved tough, losing investors money. The better tone with which the year started soon faded, though, as Europe’s seemingly insoluble problems cast a long shadow over investment sentiment.

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By the middle of the year markets were in negative territory as economic news disappointed and uncertainty over the future of the European single currency zone built. A more promising outcome for US economic activity, coupled with Olympic Games success here in the UK, combined to reverse attitudes and even resulted in an unexpected boost to our domestic GDP numbers.

2012 turned into a game of two halves, with better news boosting confidence as we reached high summer. Even Europe encouraged as Greece saw its anticipated ejection from the euro deferred.

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So we reach the depths of winter with our own FTSE 100 index likely to deliver a modest positive outcome for the year as a whole. Not all our troubles are behind us, but we have a new – foreign, but highly respected – Governor of the Bank of England and a greater degree of co-operation across the Channel than we might have thought possible. Let’s hope we all enjoy a Happy New Year.

: : Brian Tora is an associate with investment managers, JM Finn & Co.

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