Jacob: Why the market has been oversold

WHY THE MARKET IS OVERSOLD

Henderson Global Investors' chief investment officer David Jacob explains why we will not see the same market dysfunction endured during the Lehman crisis.

Many previous dramatic falls in equity markets can be explained by overvaluation of either the equity market, a sector, or the amount of leverage being used in the markets themselves. Arguably, this decline does not have those characteristics. It is our shared view the one economic participant that is in good health is the corporate sector. Strong balance sheets, deleveraged after the crisis, combined with solid cost control and good cash levels characterise many of the developed market companies. The issue this time is the market's faith in the governments that underpin our economies...