US investment bank Morgan Stanley has issued a “full house” buy alert for global stockmarkets for the first time since early 2009.
The Daily Telegraph reports that all five of the bank’s market-timing indicators are suggested that now is the time to buy, based on valuation, fundamentals, risk, capitulation and a combined market indicator.
Morgan Stanley is said to have called the top of the European equities market in June 2007 using the same market timing signals, which led to it issuing a “full house” sell alert.
Morgan Stanley chief European equity strategist Graham Secker says recent sell-offs have little to do with the underlying outlook for the global economy.
He says: “Equities remain very cheap relative to government bonds and there remains a lot of liquidity around that is looking for a home.”
He adds: “Our indicator is not the Holy Grail of investing. We think that on the balance of probabilities, the risk-reward ratio looks pretty good right now, but it is not a very good week-to-week timing signal.”