Global Shares Likley To Be On Uptrend, Says Economist

By Tengku Noor Shamsiah Tengku Abdullah SINGAPORE, Jan 4 (Bernama) -- While the global shares are vulnerable to a short-term pullback after strong gains so far this year, the broader trend is likely to remain up, says Shane Oliver, head of investment strategy and chief economist of AMP Capital Investors. He said valuations were attractive, particularly against low bond yields, the risk of a meltdown in Europe has receded, momentum in global economic indicators has turned positive, monetary conditions were easing and there were lots of cash on the sidelines. "The key development over the last week was that manufacturing business conditions indicators in the US, Europe, Japan, China, India and even Australia all rose in January providing confidence the global economic recovery is continuing. "This is different to the situation around the September quarter last year when they were all falling. "It's also positive for share markets and other growth related trades," he told Bernama here Saturday. Oliver said the good economic news was capped off by news of much stronger-than-expected US jobs growth in January. The 243,000 gain in jobs and fall in unemployment to 8.3 per cent from 8.5 per cent in December added to confidence that the US economic recovery was self-sustaining, he said. "It's good news for US workers, for the global economy and for share markets and commodity prices," he said. Oliver said there was nothing new out of the European leaders' summit and the Greek debt restructuring negotiations were continuing to drag on. However, he said, the good news was that investors seemed a lot more relaxed about the rest of Europe with Italian, Spanish and French bond yields falling further over the last week. He said China also sounded more willing to provide assistance to Europe, probably through the IMF. "If China gets on board with further funding for the International Monetary Fund other countries are more likely to follow," he said. Oliver said the the continuing rally in share markets has come despite somewhat soft profit results in the US and quite weak results in Europe. However, he said, it was worth noting that shares fell last year despite much stronger profit results, so the soft results now being seen had arguably already been discounted. Oliver said he expected China's inflation data (due Thursday) to show a further moderation to four per cent and export and import data (Friday) to be particularly soft. He said the European Central Bank meeting on Thursday should be cutting interest rates again but it might reserve its next bout of stimulus to the next handout of cheap loans to banks under its long-term refinancing operations later this month. -- BERNAMA