Growing appetite

Western equity markets have now risen from their mid-March trough and are close to our current market estimates of fair value. While bond yields have risen from the low levels reached in March, we expect them to rise further in coming months, and for the time being are holding the proceeds in cash. Forthcoming equity market retrenchment could offer an opportunity to re-enter stocks or, alternatively, a rise in bond yields would make fixed income more attractive than cash. We maintain the view that equities will outperform bonds in 2003. A return to the stellar rewards from equity markets ...