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EXPECTATIONS COMMENTARY

The US equity market prospects are at their lowest ebb this year, despite the continuing good news on the economic front, according to investment managers in our 'Expectations' survey (pages 14, 15). They are still largely neutral (51%, same as in February) about further market rises there. But the proportion predicting US price falls has risen to nearly a quarter of respondents.
The Euro-zone is the main attraction with the proportion expecting markets to move upwards now almost hitting three quarters, compared with two thirds just a month ago. The UK is being caught up in the positive euro-mood as now 57% of managers, compared with 50% in February, are looking for equities to rise.
As far as the Far East region, there are some glimmers of optimism as a number of the markets begin to show new life. While the numbers of managers sitting on the fence has reduced, the proportion of those expecting falls there has also risen. Japan has still to convince investors, as the number of managers expecting the market to recover over the medium term is at the lowest level for the past four months. Yen bond prices are likely to rise say marginally more managers. This band is now at 12%, having been just 1% at the end of 1998.
On the eurobond front, most managers are of the view that rates will stay as they are, but over the past month there has been a shift in opinion towards bond prices falling in the Euro-zone.

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