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Global growth to slow but no recession for 2008

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Despite softening global economic growth, HSBC Investments has predicted stock markets will rise modestly in 2008, but not by a significant margin.

Roger Noddings, chief investment officer at HSBC Investments, has said that world economic growth will slow during 2008, but that a recession is not on the cards. Emerging markets will continue to outperform developed markets, especially in terms of equities, according to Noddings.

He said: “Owing to the impressive economic growth rates, we expect global emerging markets will outperform most developed markets. The main downside risk to emerging markets is that turbulence in global financial markets could disrupt capital flows to emerging markets and thus trigger problems for the expansion of their domestic markets.”

Noddings added: “The global economy has faced a significant test in recent months. Nonetheless, generally sound fundamentals should keep the global economy, in aggregate, on course. A mixture of cheap equity valuations and dramatic policy response should allow stock markets to rally toward the end of 2008 as they look forward to steadier conditions in 2009. I expect that the FTSE 100 will close 2008 at around 6,800.”


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