Goldman's O'Neill: World stocks to extend rally

Global growth momentum will help extend a nearly two-year rally in world equity markets by as much as 20 percent, Jim O'Neill, chairman of Goldman Sachs Asset Management, said on Thursday.

Stocks, which still have a high "risk premia" after the financial crisis, are the favored asset class in 2011 for Goldman Sachs Asset Management, which has $677 billion in assets under management, O'Neill told a press briefing.
"Overall, it's a very supportive environment for investors to be thinking about equities," he said, later adding that the run could be another 15 percent to 20 percent.
O'Neill said businesses will benefit as growth in China and the United States outpaces consensus predictions. China on Thursday reported its economic growth quickened in the fourth quarter of 2010 to 9.8 percent, more than expected and sparking concerns of tighter monetary policy.
His confidence is reflected in forecasts by Goldman Sachs Research, which has bullish projections for gross domestic product in developed nations for 2011. It predicted GDP in the United States will rise by 3.4 percent this year, beyond the 2.7 percent consensus. Growth in China will probably jump another 10 percent, past the 9.1 percent consensus, the research shows.
"A lot of people don't realize the sheer dimension of its rapidly growing importance on the world economy," including exporters in the United States, said O'Neill.
Commodities and fixed-income assets are "a bit trickier," he said, noting that government debt isn't attractive either on an absolute or relative basis.