Swip head of international equities Michael McNaught-Davis believes the possibility of slipping back into a global bear market has increased to 40% in recent weeks.
McNaught-Davis, who believes government spending cuts across many parts of world risks stifling economic recoveries, says the likelihood of a global bear market has jumped from about 30% a month ago, Bloomberg reports.
The MSCI World has plunged upward of 10% over the past month as pressures on many eurozone nations to reduce record budget deficits led to an investor exodus from risk assets.
"There is a definite risk of a bear market and the reason why we do not quite believe it at the moment is that at the micro level it still looks quite rosy," McNaught-Davis says.
"But at some point the bigger picture will impact economies more severely."
While bearish on the economic headwinds, McNaught-Davis says Swip still expects the MSCI World to advance this year and in 2010.
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