Barclays Capital Advises Clients to “Stay the Course” in Coming Months

Investors should retain a neutral position toward risky assets, Barclays Capital today said in its latest flagship quarterly research publication, Global Outlook: Stay the Course. This stance is consistent with the March 2011 Global Outlook, in which Barclays Capital recommended a more cautious approach to markets after two years of risk-embracing positions. However, with a forecast for better economic growth in the next few months – particularly in the US – the recent decline in sentiment may be overdone.

“Risks around fiscal issues in Europe and the US will persist, but we expect the news over the next few months to take a turn for the better in several areas,” said Larry Kantor, Head of Research. “Therefore we do not advise any further pullback in positions, and see the current market correction as having opened some tactical opportunities.”

While upside is likely to be limited by a lack of resolution of the debt situations in Europe and the US, and by continued risks of inflation and monetary tightening in large emerging economies such as China, improved economic growth and the avoidance of a near-term crisis around a Greek default may represent a tactical buying opportunity into the summer, the report notes.

Additional themes of Barclays Capital’s Global Outlook include:

• A preference for equities, particularly in the US, where policy will stay supportive, and valuations remain reasonable in absolute terms and cheap relative to both cash and bonds
• With extremely accommodative monetary policies and cyclical sectors still at low operating levels, a “double-dip” recession is quite unlikely
• The lack of resolution of fiscal problems in Europe and the US, as well as inflation and tightening pressures in Emerging Markets, will cap market gains going forward

About Barclays Capital’s Global Outlook

The Global Outlook research report, published quarterly, provides an assessment of all major economies and outlines the likely implications for global financial markets, including commodities, credit, economics, emerging markets, equities, fixed income and foreign exchange.

About Barclays Capital Research

Barclays Capital is committed to bringing our clients a best-in-class, global research franchise. The firm has a team of approximately 800 professionals covering every Research discipline, every asset class and every region. In 2010 Barclays Capital was named Best Bank for Credit Research and Best Index Provider in the Credit Magazine Americas Awards, was named Commodities Research House of the Year in the EnergyRisk Asia Awards, ranked #1 for Fixed Income Research by FinanceAsia, ranked #1 for Overall Trade Ideas, #1 for Sovereigns Research, and #1 for Supranational and Agencies Research in the Euromoney Fixed Income Research Poll, and ranked #1 for Bond Market Indexes and # 1 for web-based tools in the Institutional Investor All-America Fixed Income Research Poll.

About Barclays Capital

Barclays Capital is the investment banking division of Barclays Bank PLC. With a distinctive business model, Barclays Capital provides large corporate, government and institutional clients with a full spectrum of solutions to their strategic advisory, financing and risk management needs. Barclays Capital has offices around the world, employs 25,000 people and has the global reach, advisory services and distribution power to meet the needs of issuers and investors worldwide. For further information about Barclays Capital, please visit our website www.barclayscapital.com.