Investors can hardly be blamed for thinking that there is an effective safety net, however much central bankers protest that this is not the intention.There are plenty of other reasons for thinking we are not yet in a sustained bear phase. The amount of merger activity remains high, both in the US and Europe, and share buybacks show no sign of a let-up, further swelling the pool of cash looking for a good investment home. With emerging markets and Japan now no-go areas for Western investors, where else but their own stock markets can they look?All these factors are underpinned by the continued strength of Western bond markets. Falling inflation, shading into price deflation, means that the immediate outlook is for ever-cheaper money. This in turn makes equities look cheap in relative terms, always assuming, of course, that the traditional relationship between bond and equity yields is broadly maintained.Furthermore, it is a mistake to judge equities as a whole by what is going on among the market leaders.

The FTSE 100 index finished the year up nearly 15 per cent, but the next largest 250 companies, as represented by the FTSE mid cap index, on average barely rose at all. As for the small cap and fledgling indices, they closed a fair bit lower. And even within the FTSE 100, the picture was very mixed.In short, the makings of the sort of radical shift in investor psychology that might cause western equity markets to go into sharp decline just don’t seem to be there right now. That’s not to say I think Wall Street and London rip-roaring buys. I’d be amazed if these markets record double digit growth this year. With the euro launch providing a following wind, I suspect the best value will be had on the Continent, and particularly from Frankfurt and Paris.My advice on Japan is the same as it has been for some years now. Don’t be beguiled by those who insist that after a 10-year bear market, Tokyo is on the verge of revival.

Valuations in Japan are still far higher than the US and Europe, while economically, the country is in much worse shape Need I say more?. RESIDENTIAL property company Gander Holdings yesterday said that it had agreed to be taken over by Anagen, a shell company, in a deal which will reap tax advantages of over pounds 27m, writes Simon Duke. Anagen, a now-defunct biotechnology company, has applied for a listing on the London Stock Exchange, and will offer 512 million new shares to Gander stockholders on a one-for-one basis. The offer will lead to a capital gains loss of pounds 27m for the new entity, to be named Gander Properties, which will then be used to write off future taxable gains on property sales.
The deal is expected to be completed by the end of January, when the present board of Anagen, who will retain 2.8 per cent of the new shares, will step down in favour of Gander’s present management.Gander, whose speciality is developing residential properties in Kensington and Chelsea, London, which it either sells or rents out, has a market capitalisation of around pounds 35m at Wednesday’s closing price of 6.75p, just over half of the net value of its property portfolio.In October, Gander said that it expected to report losses in the years to January 1999 and 2000, as a result of the September acquisition of Barrasford Holdings, a loss-making property company..