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DBS Bank releases positive outlook for third quarter investment opportunities

DBS Bank recently released an investment outlook forecasting that global equities will go up in the third quarter of 2014.

“Stay invested. The equities bull market is aging, but the termination of the global equities uptrend from 2009 does not appear to be imminent,” DBS Bank's Chief Investment Officer Lim Say Boon said in a statement. “A more likely scenario is a significant correction in the second half of the year. Beyond that, global equities should, but with significant rotation of leadership and outperformance.”

“Cheap money — along with negative real interest rates — remains a powerful incentive for investors to stay with risk, in both equities and corporate credits,” he said.

Moderate economic growth, cheap money and low volatility continue to argue for people to stay invested in equities despite higher risks compared to a year ago, DBS said in the outlook. In U.S. and European equities, the pace of gains of recent months suggests the likelihood of an overdue, significant correction. Market complacency is a concern, the bank pointed out, stating that its “U.S. Greed/Fear” Index — simply a restatement of the relationship between the S&P500 price to earnings ratio (PE) and the equities volatility index (VIX) — speaks of a degree of complacency not seen since 2007.

Absent a systemic shock, and there is none evident on the horizon, the developed market bull will likely continue to run after that expected correction, the bank pointed out.

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