TAIPEI, Taiwan - DBS Bank pointed out in its quarterly forecast that the stock market is expected to maintain its positive performance in the future, based on a number of factors including growth in business revenue, good global liquidity and the global economic recovery.
The stock market has risen by more than double from the lowest point of the 2008 financial crisis, and major indices in the US have also risen to historic new highs.
DBS Bank indicated in its quarterly investment forecast that although shares usually come down after reaching highs, the stock market is expected to maintain its positive momentum in the future.
DBS favors investing in risk assets based on the following reasons:
- Although the pace is slightly lethargic, the world economy is recovering.
- Business-wide revenue growth can help support high stock prices.
- Stock prices are still reasonable.
- The negative real interest rate, plus the interest rate spread between government bond and stock dividend yields, aids stock performance.
- Very good global liquidity.
- Economic growth in developed countries will not lead their central banks to implement austerity measures.
- Central banks in United States, Europe and Japan have pledged to lend money to countries mired in debt.
Although major US indices have climbed more than double from their lowest points of 2009, with current revenue growth momentum, DBS forecasts it is still safe to invest in the US stock market, while the P/E ratio is currently at the median value.