The majority of global equity markets ended the year with significant gains. Most surged off the excessively low valuations reached earlier in the year, fueled by low rates and cheap money. Although the worst appeared to be behind us, and many countries saw increasing manufacturing numbers, all was not well in certain pockets of the world. Late in the year Dubai announced they would not be able to make debt repayments only to be bailed out by one of their Arab Emirate brothers.

After a scary 2008 and early part of 2009, the markets got off to the strongest start of any postwar cycle. 2009 saw risky assets outperform safer ones. Itʼs all about leverage. As financial and individuals de-leveraged, governments stepped into the abyss with massive government stimulus programs. Fiscal stimulus programs in the U.S. are about $800 billion and an equal amount or greater in the other economic zones. About an eighth to a quarter has filtered into the economy as of yet. Government balance sheets have expanded at an unprecedented rate.

Equity markets rose again this quarter, capping an end to 2009 that saw asset values climb significantly, prodded forward by accommodative monetary policy and a host of other government measures intended to stave off a depression. In a year where 20 and 30 per cent returns were not uncommon, we note how sentiment has changed significantly in 12 months.

Stock price performance has been very robust for the three month period ending December 2009, as investors increasingly became constructive about the state of the economic union.

Asset markets moved ahead in the third quarter as investors continued to seek out risk, and administered rates remained low while government spending filled gaps in the global economy.

Both equity and fixed income markets continued to exhibit positive results in the third quarter of 2009, on growing evidence of a broadening economic recovery. Underpinned initially by Central Bank and fiscal policies, the economic recovery is now being accentuated by the improving business, consumer and investor sentiment. Credit spreads continue to narrow on the gradual return towards normalization.