FINANCE NEWS: Baring calms hope of a postwar boom in equity markets

Fund management firm Baring Asset Management is predicting "modest but positive returns for equities" rather than an economic boom after the war in Iraq.

"The imbalance of forces in the war should lead to a fairly quick military settlement and relieve markets from much geopolitical uncertainty," said head of asset allocation Percival Stanion.

"This should encourage consumers and industrialists to make purchases and investments delayed in the build up to war."

Baring is recommending that charity investors go "overweight" in UK equities which "represent outstanding value, moderated by the realisation that a new, stable world order may take time".

It believes that government bonds may not be a safe investment, warning investors to remember that "wars can be bad news for fixed income assets".

Stanion said the firm was basing its wartime strategy around equities.

"They are likely to perform better because sector leadership changes and company management is adaptable," he said.

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