King says that the market has become unreceptive to valuing stocks in terms of their fundamentals and says he is focusing on larger companies that have limited balance sheet risk.
He says: “We remain very cautious about the prospects for consumer-related stocks and, in an environment where banks are becoming more draconian, about businesses where financing risk is likely to become an issue.”
King believes the second half of 2009 will be more fruitful as equities turn in advance of an economic recovery.
“We expect further, negative economic and company news flow during the first half of 2009 and are sceptical that the stock market can make headway against this background.
“However, we are conscious also that the market will return to a more normal discounting mechanism ahead of any hard evidence of a reflationary economic revival. While we believe that this inflexion point remains some way off, we think it will be a very profitable one for those who anticipate it correctly.”