Mott warns on 'wildly optimistic' UK earnings growth forecasts

PSigma's Bill Mott has warned earnings growth forecasts for UK companies are far too high, while equity markets have reached a peak and are set for a correction.

The manager of the £450m PSigma Income fund predicts UK earnings will grow 6%-8% this year, below the consensus forecast of 11%. He said slowing economic growth will drive earnings lower, and predicts GDP growth of below 1% for 2012.  “The aggregate forecast for 11% earnings growth in 2012 looks wildly too high. Until we can get a clearer handle on how QE is going to unfold, we will stick with our defensive positioning,” he said. “The FTSE 100 may have gone up a couple of hundred points since the turn of the year but it is not sustainable. Quality has been sold down and the cyclical...