The direction of stock markets

In my personal opinion, Asian stock markets, at least in the next few months, will still be heading higher. Here's why:

1.The Shanghai stock market is now recovering, and on the cusp of breaking of its base cup formation.

2. Emerging markets have room for further gains in the next one to two years because of earnings and growth prospects (Allan Conway, head of emerging market equities, Schroeder)

3. Richard Lacaille (State Street) and Xavier Denis (SG) are sceptical about a US recovery, but are "overweight" emerging-market equities. There is a fair degree of confidence that earnings will be more robust in emerging markets than in developed markets.

4. Inflation does not appear to be a near-term issue, and interest rates likely to stay low for a reasonable period of time.

However, key risks include:
1. US $ will see a rebound next year, as it is currently "undervalued". This may have negative implications for equities, and commodities, including gold.