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Strange world where stock investors chase dividends, bond investors chase capital gains

Friday, January 30, 2015 - 14:06
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AS yields stay low and too much capital chases too little returns, financial markets are in a strange situation, said Dominic Rossi, Fidelity's global chief investment officer for equities, at a press briefing on Friday.

AS yields stay low and too much capital chases too little returns, financial markets are in a strange situation, said Dominic Rossi, Fidelity's global chief investment officer for equities, at a press briefing on Friday.

"This is a curious world where bond investors are investing for capital return and equity investors are investing for income," he said.

Meanwhile, the US bull market shows no sign of stopping. The danger is that markets will rise sharply, said Mr Rossi.

He said the US dollar might have become more expensive but it still has some way to go if one looks back at historical data.

Profit margins, at historically high levels, can go up further as unions are not as powerful as before and labour costs continue to stay low. With the strong US dollar depressing commodity prices, the US will go through a boom especially as consumer confidence picks up. This will put upward pressure on earnings multiples, he said.

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