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INVESTMENT OUTLOOKInvestment StrategyBond prices came under downward pressure as investors braced themselvesfor US monetary tightening. While prices may appear attractive, investors shouldalso consider the higher potential risk. The Fed has clearly sent its intention toeventually pare down its purchasing of bonds, a move that may likely lead to arise in interest rates and corresponding drop in bond prices. That said, the Fedhas also gone to great lengths to assure investors that there will be a signifi cantlag between the end of quantitative easing and the start of interest rate hikes,with possibly a year’s gap or even longer if necessary.Stocks have historically delivered more attractive longer term returns comparedto bonds. However, expect returns from stocks to be more modest, in line with aglobal economy still in the early stages of fundamental recovery from the globalfi nancial crisis and the European debt crisis.The World Bank forecast that the world economy will expand by 2.2%, 3% and3.3% in 2013, 2014 and 2015 respectively. Whilst emerging countries are notgrowing as quickly as before, they will still lead global growth. Projected growthfor emerging countries is 5.1% this year and will strengthen to 5.6% and 5.7%in 2014 and 2015.If US and China’s efforts to re-balance their economies do not rock themarkets excessively, the recent price correction for stocks may well pose asan opportunity to acquire attractively valued investments that may slowly andsteadily appreciate in value in an environment of real and sustainable economicgrowth.1Source: “China set to embrace slower GDP growth”, 2 July 2013, The Straits Times2Source: “Factory data points to stronger Japanese economy”, 29 June 2013, The Straits TimesInvestment OutlookDisclaimer: The report is accurate at time of writing on 5 July 2013. Pastperformance is not necessarily indicative of future performances. Any opinion orview presented is subject to change without notice. The document is intendedfor information purposes only, and is not intended as an offer or solicitation forthe purchase or sale of any fi nancial instrument.The information provided may contain projections or other forward lookingstatements regarding future events or future fi nancial performance of countries,markets or companies, and such prediction or forecast is not necessarilyindicative of the future or likely performance of the fund.4