SINGAPORE: Global shares remain at risk of a further correction during the seasonally weak period of around mid year, says head of Investment Strategy and chief economist, AMP Capital, Dr Shane Oliver. He said China, Europe, and a further soft patch in US economic growth, North Korea, the bird flu epidemic and continued softness in the non-mining parts of the Australian economy, were all risk factors. But all was not bleak.
“Any setback in share value is likely to remain mild and the broad trend is likely to remain up. Shares are still far from expensive.
“The strengthening growth outlook led by the US, points to stronger profits ahead, and investors are likely to increasingly switch from low yielding cash and bonds into shares as confidence continues to build, ensuring solid ‘buy on the dips’ demand.
“A pick up in mergers and activity from cashed up lowly geared companies is also likely to be a big positive for shares this year.
“So, notwithstanding the usual bumps along the way, this all adds up to a positive backdrop for share markets,” he told Bernama.
Oliver said sovereign bonds would be helped by Japanese monetary reflation and any further correction in shares. — Bernama