Asian equities may have more bounce (page 2 of 2)

The category average performance of -10.4% during last years bear market was fairly good compared to the market as a whole, but this year has shown an average return of only half of the rise in the Global Equity category (8.6% so far in 2003)

However, the average return hides a marked discrepancy between the underlying sectors. The best performing funds in this category last year which I recommended in an early article last year - those focusing on gold and mining companies - have mainly been poor bets this year.

Gold funds traditionally tend to be regarded as a safe haven, and can do well when the wider market is suffering from problems. For example, they benefited from investor anxiety as the Iraq war was unfolding, but have suffered with the relative decline in the dollar and relaxation in post war tension.

Stocks in the Nasdaq hit a near a 14-month high last week at 1,721.25. This was the highest close since May 17, 2002 as bullish comments from Wall Street's biggest brokerages on the chip sector and an anticipated economic recovery fuelled the buying of technology shares. An upbeat view on technology spending from Goldman Sachs, and a report from Deutsche Securities revising upward its outlook for the global chip market helped to spur the market.

In the US, the Dow Jones industrial average ended the week up 146.58 points, or 1.62 per cent, at 9,216.79, after rising more than two per cent earlier in the session. The broader Standard & Poor's 500 Index rose 18.8 points, or 1.91 per cent, to 1,004.50.

It would appear that investors are betting on a rebound in the second half of the year, fed by low interest rates and solid corporate earnings in the quarterly earnings season, which starts this week. Whether earnings will justify the markets' rally has yet to be seen.

So with ups and downs, and volatility still the order of the day, it looks like there are profits to be made if you get the timing right, but for those looking for a trend to follow, there does not seem to be much of a clear path. And for those of a cautious nature, safety, security and patience would seem the watchwords.