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Julian Gibbs

Most investment managers are optimistic about the outlook for world stockmarkets this year, with the consensus view of all markets being positive except for UK Government securities, where most are pessimistic and no one is optimistic.

While most are neutral about US smaller comp-anies, Europe, UK corporate bonds and international bonds, they are most optimistic of all about the Pacific exc Japan.

Twenty-three of the 25 managers are positive, with the remaining two neutral. They feel the same about emerging markets, with no one pessimistic and 22 out of 25 bullish. Most are optimistic about UK equities but two firms which I respect highly, Fidelity and F&C, are negative, with Merrill Lynch, Morley and Schroders being pessimistic about UK smaller companies.

Views are mixed about the US and Europe but most, with the exception of HSBC, Investec and Morley, are positive about Japan. My favourites are China, the Far East, UK funds investing in a mixture of large and small caps, Japan and US smaller companies. In a US election year, it is never wise to omit some exposure to US shares. UK Government securities and top investment-grade corporate bonds should be avoided.

Global growth will probably be redistributed from the US to Asia, especially China, where high growth will help the other countries in the Far East. Hong Kong will continue to be a beneficiary of China&#39s growth. Exports from the Far East and India are expected to remain robust as the major Western economies con-tinue to outsource much of their manufacturing and some services, such as call centres, to Asia.

Overall, I am an opt-imist and a well balanced portfolio should return between 10 per cent and 15 per cent over this year.


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