>INVESTMENT OPPORTUNITIES IN 2010

In Focus
■ After an initial rebound, global growth may be shallow, hence stimulus is likely to remain in place.
■ Nevertheless, markets will start to factor in lower liquidity provision, so yield enhancement will be key.
■ Investors should therefore focus on dividend yield, select risks in corporate bonds, domestic Asian growth and agricultural commodities to mitigate this transition year towards a new monetary regime.

Economics
■ The broad-based cyclical acceleration is continuing to gain speed, but its sustainability remains
questionable.
■ The major risk to our baseline scenario is that we may underestimate the short-term strength of the recovery.

Currencies
■ CNY appreciation will facilitate the strengthening of other Asian currencies.
■ Further room for appreciation of commodity currencies that offer a reasonable valuation, like the NOK and the CAD.

Bonds
■ Default rates to decline as growth stabilises and generous amounts of liquidity are provided.
■ High-quality bond segment is expensive relative to the outlook for growth and inflation.

Equities
■ We expect the market recovery to last well into H1 2010. Speculation about rising central bank rates is likely to keep stocks rangebound thereafter.
■ We recommend focusing on the eurozone and EM Asia as well as on high-dividend strategies, which should become more attractive again as yield enhancement.

Commodities
■ The global liquidity glut and inflation fears continue to lift commodity prices, but tension is growing in selected markets.

■ Speculation about further central bank gold purchases is likely to lift gold to new highs in the near term, but monetary tightening should mark the tipping point.

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