Inflation's impact on equity income

INFLATION

Lazard's Alan Clifford examines the impact inflationary concerns may have on the UK equity income sector.

Equity markets overcame any number of concerns at the beginning of 2010 to register a surprisingly good year. Though the market environment was hardly as strong as 2009, by the third quarter, UK equity investors saw genuine momentum behind the economic recovery, regardless of continuing sovereign debt issues in Europe. In contrast, investors appear to view 2011 on a largely positive macroeconomic note, focusing on corporate balance sheet strength and healthy profitability, despite a surprise weather-related drop in GDP in Q4 2010. The earnings season is not yet finished, but has so far b...