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Investors could miss out on ‘sweet spot’

Financial markets are going through a short-term “sweet spot”, according to investment management firm Morgan Stanley Quilter.

The firm says while everyone is focused on oil, there are opportunities that are in danger of being missed in financial markets, and investment portfolios should be positioned to take advantage of profit growth that is ahead of expectations.

Corporate profits were forecast by analysts at 8 per cent in early 2005. But following the half-year results season, the firm says profits are forecast to grow by 12 per cent.

Morgan Stanley Quilter bel-ieves those investors predicting that profit growth will fall to single digits by mid-2006 may be pessimistic.

Chief investment officer Duncan Gwyther says: “Part of the reason for the extended profit cycle is that capital expenditure is not as high as in previous cycles and as a result many companies have an abundance of cash.”

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