Shares stay bullish for 2000

THE outlook for shares, although threatened in the short term by high bond yields and the Y2K fear, remains bullish for 2000 according to BNP Equities latest report card on equity markets.

Macroeconomic conditions such as high growth, low inflation and low interest rates should see equities continue in strength, the report said.

An anticipated $6 billion of extra spending as a result of net tax cuts, Olympic spending and the digital revolution that will reduce costs, keeping inflationary pressure to a minimum, offers a recipe for long-term earnings growth among

industrial equities according to the BNP report.

However, the report says there are near-term threats for stocks in 1999.

Rising US bond yields that are likely to continue upward for the remainder of 1999 will keep local yields under pressure and cause industrials to struggle.

BNP also points to Y2K as being

a factor of uncertainty that may cause investors to remain cautious in the countdown to 2000.

BNP Equities suggests “investors move away from industrial cyclicals in favour of services, consumer products companies and retailers” for the rest of 1999.