THE rampant bull market of the past ten weeks stalled in the early part of last week, on the natural realisation that the rate of recovery in the stock market had been exceeding the rate of recovery of the economy.

A number of factors led to a pull back in the FTSE, but only on the basis of five steps forward, one step back.

The Bank of England’s projected growth report, the most respected economic indicator, showed that the optimism on display in March and April was a little too vigorous.

Even so, the new projections merely showed a wider V-shaped recovery, than the earlier sharp Vshaped recovery.

It might be too soon to hang out the bunting, but there are increasing tentative signs that the UK economic crisis is over the worst. The pace of house price falls has been slowing, and indeed prices have been rising in some areas. There is evidence that the falls in value over the last two years have brought prices back to the long term growth rate, having obviously been over heated two years ago. The latest Royal Institution of Chartered Surveyors (RICS) survey showed that 41 per cent more surveyors reported a rise in inquiries last month than those who saw a fall – the highest figure since July 1999.

Anybody who has tried to find a parking slot at Teesside Park retail park will have been bemused by constant stories of all retailers suffering in the recession.

While Teesside Park cannot be used as a national indicator, it must say something to suggest that some shoppers have more disposable income than they used to, as opposed to buying on credit. The British Retail Consortium, however, recently reported that our retailers had their strongest sales growth for three years.

The vital word confidence is returning, along with an increasing appetite from private investors attracted to a rising stock market, having been on hunger strike for the past six months.

The appetite has been seen in the rights issue bonanza that has been under way in the last few months. Companies have been tapping shareholders for more cash. The rights issues, which are essentially an offer to shareholders to buy further shares at a discount, have demonstrated the potential for significant capital growth, where valuations have been at historic lows.

Recent cash calls have been announced by Travis Perkins, which owns Wickes the DIY chain, Debenhams, Taylor Wimpey, the house builder and 3i, the private equity group. These follow hot on the heels of similar calls earlier in the year by HSBC and Premier Foods.

There have been 28 rights issue deals in 2009, amounting to £18.3bn, which investors have found from somewhere.

Rights issues can be complex, and care needs to be exercised when an issue is an open offer, rather than a rights issue. With rights issues there are usually three options available to investors. Take up the offer and buy the rights, sell their entitlement which will dilute their holding or take up the so-called nil rights option. This allows the shareholder to take up some of the rights which maintains the value of their holding, without putting their hand in their pocket.

Watch out though for the open offer, which is a take-it or leave-it option. There are bargains about.

* Anthony Platts is a divisional director in the Teesside office of Brewin Dolphin, and can be contacted on 0845-213-1340. All prices quoted in the article are from public sources. The views expressed are not necessarily held throughout the Brewin Dolphin Group. You should bear in mind that no investment is suitable for all circumstances and it is important to seek expert advice if in any doubt.

Brewin Dolphin Limited is a member of the London Stock Exchange, authorised and regulated by the Financial Services Authority.