TO PARAPHRASE OLIVIER Ginguene, his theme might be: 'Crisis, what crisis?' Most of the investment world is tying itself in knots trying to work out whether the recession-hit United States economy is going to rebound next year or not. But Mr Ginguene, who heads Credit Agricole's global equity team, is pretty confident next year will be a winner for investors whatever happens. 'I expect it to be a normal year if we are in a recession but a very good year if there is a rebound in macroeconomics,' he said. Earnings growth of 15 per cent in major markets was 'really achievable' due to the help of a very low base set this year. If conditions improved, investors might pay an extra premium to hold stocks. 'You can expect something like 20 per cent on the market next year,' said Paris-based Mr Ginguene, whose team looks after US$3 billion in funds. Much has been made of the global liquidity-driven equity rally which began 10 days after the September 11 attacks. But that only brought stocks back to where they should be on a valuation basis, Mr Ginguene said. 'The relationship in the stock market worldwide is mainly about forward [price-earnings ratios] against interest rates,' he said. 'In the US and Germany and probably all around the world, except for Japan, the 12-month forward PE [price earnings] is almost equal to the inverse of the 10-year rate.' There were only four times in the past 15 years when US stocks became as cheap relative to interest rates as they did after September 11. These included the 1987 crash, the 1990 recession and the Asian financial crisis. With the recent run-up, stocks were now 'fair value against bad economic conditions', he said. 'They are pricing almost zero growth in the US and probably European [gross domestic product] for the next year. Now if there is any good news . . . it will come into the equity market.' After being too optimistic at the start of last year, analysts had done their job in chain-sawing their expectations for earnings growth to realistic levels. Pointing to a chart showing analysts revisions against industrial production, he said: 'Analysts on a global basis are just mimicking the macroeconomics. There is no originality. They are exactly in line with the very bad conditions. 'The P is fair value and the E is very low. If we stay in recessive conditions the E will remain low. It will be a stable market with little upside.' When Mr Ginguene does mention a crisis, he sees it as something that will soon be history. The shock of US energy giant Enron filing for Chapter 11 bankruptcy protection typified the final acts of what has been a 20-month bear market for stocks. 'If we have some more Enrons, which will probably be the case at the end of a crisis, people will come back to quality,' said Mr Ginguene. ''The first stage of a rising market is when low-quality stocks are supposed to be still alive so the performance is up. 'Afterwards, probably at the beginning of next year, you will have a rally in the more serious names, well managed, [with] good quality and good track record.' There are some serious names in the top 10 of CA Funds Global Equity which Mr Ginguene runs, including technology heavyweights IBM, Microsoft and Intel. 'The problems for the technology [sector] are probably behind us now,' he said. 'It is not the case for the pure cyclicals. For technology the problem is older. They have made their adjustments and the dead are already dead. ' Many commentators have virtually written off the personal computer (PC) after weak sales in the past two years. But Mr Ginguene believes next year's growth will be surprisingly strong given that PCs were bought en masse when Y2K fears were at their height. 'This is a time for obsolescence,' he said. 'Now the question is how long can they stay with 1999-standard PCs? I think we will say between 1.5 and 2.5 years for changing half the PCs in a company.' While Mr Ginguene is 3.15 per cent overweight on technology against the benchmark MSCI World Index, he is 5.5 per cent underweight on banks. 'If you see bankruptcies at the end of the crisis it is normal for the markets but for the banks there will be some problems,' he said. Mr Ginguene does not run a box-standard global fund but believes in maintaining a bias towards big-cap companies which have consistent earnings growth records rather than those on cheap valuations. 'We are very rarely investing in materials or in commodities,' he said. 'These are very competitive sectors. In general we are underinvested in deep cyclicals because we consider there is no long-term growth in these sectors. This is a zero sum game between the players.' The market has been against Mr Ginguene since the Nasdaq bubble burst in March last year with mid-cap and value companies coming back in style. Growth will be ruling the equities roost once more he believes, however, 'we think we are now coming back to a more positive orientation of the market for us'. Mr Ginguene's aim is to outperform the benchmark strongly when markets are running hot for growth and then limit the downside by raising cash and buying more defensive stocks during downturns. The fund gained 50.1 per cent against 25 per cent for the MSCI World in the 1999. But last year the fund lost 17.3 per cent against 12.6 per cent for the benchmark. For this year to the end of last month the fund has lost 25.9 per cent against the benchmark's 18.3 per cent. Losses like those have hurt investors badly but Mr Ginguene insisted that equities would outperform in the long-term. 'You are buying equity so you are buying risk,' he said. 'So you have volatility for two or three years. But if you keep this position for at least five or six years you are beating the bond market almost every time. You just need time to get in and more to get out at an appropriate level.' He assigned a low probability to the scenario of the US economy going into a deflationary tailspin caused by excess investment in the 1990s. Computer-driven management systems meant executives now had more timely information than their predecessors. 'There are stronger statistical tools that can help them to adjust their production capacity to the level of the economy,' said Mr Ginguene. 'The US companies have made more cost adjustments in the past nine months than have been made in Japan in the last 10 years. I really don't think we are going into a secular bear market. Europe is not as liquid as the US economy but adjustments [have been] made as well.' Olivier Ginguene 1992:Graduated from Polytechique of Paris with a degree in engineering. 1993:Began work as a trainee fund manager with Credit Lyonnais Asset Management. 1994:Graduated from the National School of Sta tistics and Economics, ENSAE, with a mas ters degree in economics and statistics. 1994:Head of equity team at Credit Lyonnais Asset Management. 1998:Moved to Credit Agricole Asset Manage ment as head of research. 2001:Promoted to head of global equities.