Barclays Wealth Tells Clients to Add Developed Market Stocks

Barclays Plc’s wealth unit is recommending clients to put 42 percent of their total investments in developed market equities in the first quarter, higher than the 36 percent usual long-term allocation. In Asia, it likes Chinese banks and technology companies in Taiwan. Aaron Gurwitz, New York-based Barclays Wealth chief investment officer, and Manpreet Gill, its Singapore-based Asia strategist, commented at a press briefing in Hong Kong today.

Gurwitz:

“All of the major economic regions of the world are growing and likely to continue growing. The exceptions are some of the peripheral economies in Europe.

“We don’t see any significant risk of a double-dip recession in 2011 or 2012 for that matter.

“The developed countries are not growing fast enough to bring the unemployment rates down to more normal levels.”

The central banks “will not be worried that the growth is too fast and might lead to inflation and want to slow it down.

“With unemployment high, labor costs are not going up. When you look at unit labor costs for production around the world, particularly in the developed countries, particularly in the U.S., you see that labor costs are declining or are not rising very much at all. And that translates into strong earnings growth even though sales growth has been weak.

“There’s a reliable source of global economic growth, global demand growth.

“As long as the developed world is growing even a little bit, the emerging economies seem to be able to sustain growth because individually they are now large enough that they can rely increasingly on domestic demand growth.

“Furthermore, trade among the emerging economies has become a much more important factor in the global economy.”

In the developed country equities markets, “valuations are more attractive relative to the emerging markets by and large.”

Gill on Asian equities:

“Within this region, our focus right now is more North Asian equities, Korea, Taiwan, China.”

Gill on Chinese banks:

“The valuation point is fairly attractive.

“It has been the focus of a lot of negative news.

“We just think that’s been more than reflected in the prices.”

To contact the reporter on this story: Bei Hu in Hong Kong at bhu5@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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