Top fund manager issues warning of stock exchange plunge

GRIM warnings that the FTSE-100 could yet plunge to 3,000 in the current uncertain global economic climate were made yesterday by a top fund manager in Britain.

Nicola Horlick, head of SG Assert Management said the prospect cannot be ruled out. One of Britain’s best known fund manager’s forecast, if it came true, would push the FTSE-100 index of top companies to its lowest level since the mid 1990s.

Ironically Horlick’s warning came the day the FTSE gained almost 2% on the back of strong oil gains and better than expected US data.

Justifying her nervousness, Horlick said all it would take was another terrorist attack to undermine the limited recovery markets have been enjoying in the past while.

She suggested the industry should follow the example of the oil sector.

It decided after the collapse in oil prices after the Gulf War to initiate a cost base capable of living with oil prices at $12 a barrel.

Outlining her case, Horlick said it was conceivable the FTSE could easily reach 3,000. “If there was a terrorist attack tomorrow, the market would be at 3,000. So we’ve got to make our business profitable at that market level,” she said.

That is the crunch issue for a sector already facing deep trouble in the changed market condition of today, she said.

It was a question of survival tactics. Fund managers should follow the example of the big oil companies.

She said fund management houses will have to slash jobs and salaries if they are to survive in the current bleak market conditions.

“The implications for fund managers are serious: big job cuts and substantial pay reform,” she said.