Even with the expectations of interest rate increases, a Merrill Lynch survey showed that global fund managers expect 2004 to be a year of growth for equity markets.

The poll, which asked 301 fund managers about their feelings on the current market and how it will move in upcoming months, showed that compared to last year, they are willing to take more investment risks. Global equity markets are expected to be higher, according to 71% of the respondents.

"What has driven much of our findings this year has been the normalization of risk appetite," said David Bowers, Merrill’s chief investment strategist

Many of the signs elicited from the fund managers – like the favoring of risky investments [such as] basic materials over typically conservative sectors like utilities – point toward the upswing. The technology sector was overwhelmingly tabbed as the most overvalued.

To the question of how the global economy will develop over the next 12 months, 69% of the fund managers said it would be stronger.

Of the respondents, 31% said they favor the profit power of global emerging markets, which represented the highest predicted upswing among all markets.

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