Sakura Financial Group analysts have apparently reminded clients to treat news of recovery with a pinch of salt and to trust in what they see going on around them rather than believing what they read in newspapers or see on television.
The Asia-based asset management firm reportedly used rising credit card defaults as an example in its latest scheduled email to clients. They cited the fact that defaults on credit cards are hitting record levels despite governments efforts to exert pressure on providers to be more lenient with debt-burdened consumers.
Sakura Financial Group attributed the rising defaults to rising unemployment and distressed usage by cardholders as the credit crunch and recession bit hard during 2008.
The firm said that many consumers were using credit cards to pay for essentials like housing and utility bills when, traditionally, these were funded by monthly salaries.
Sakura Financial Group analysts said that the trend was likely to continue into 2010 and posed serious problems for banks and, consequently, for consumers who were still having difficulty obtaining credit.
The firms email also suggested that the best way of assessing the state of the economy was to look at activity in shopping centers and malls.
Sakura Financial Group advised clients to avoid investment in banks and financials in the near-term warning that they faced write-downs and losses as the situation worsened.
Some investors have been tempted to invest in banks based on rock-bottom stock prices but the firm suggested that, although the rationale for longer-term investment for the future is compelling, better value and lower entry prices would manifest themselves in the months ahead and, as such, clients should remain patient.