More evidence of bottoming out required for Bric to grow further

Bric economies have enjoyed a strong rebound since markets started to recover, but for markets to move decisively upwards from current levels, we will need more evidence of bottoming out of developed world economic data and for upwards revisions to start to come through in earnings expectations.

Over the next few months, the markets may well be pulled in a tug of war between two opposing forces. On one side, economic data may continue to deteriorate and further downgrades to company earnings are likely. On the other side, valuations are low relative to history (although they are no longer as cheap as earlier in the year). This may tempt further buying, particularly if volatility and risk aversion continue to fall. Consequently, we may see a range-bound market for some time. It also remains to be seen whether fiscal stimulus packages will do their intended jobs. Monetary policy h...