Investors beginning to scent buying opportunities

With world stocks having fallen more than 7 percent in a month and some indexes down more than 10 percent from their highs, some market players are saying the time is near to buy. Investment bank Morgan Stanley said on Monday, for example, that it was recommending a move into equities now.
"Time to buy equities again," it said in a note to clients. "The risk-reward of buying equities on a 6-12 month view is much better now than a few months ago." Similar themes are being sounded by others.
Wealth manager Brewin Dolphin said last week that stocks were oversold and that it was time to buy, while Henderson Global Investors said on Monday that last week's falls in equity markets had created value for long-term investors.
MSCI's main world stock index was up on Monday but has fallen nearly 7.2 percent from an all-time high less than a month ago on July 20. Its emerging markets counterpart has lost 9.8 percent since July 24.
The losses have been driven by worries that credit is drying up as a result of problems in the US mortgage sector. Central banks have had to step in to pump money into banking systems.
But one result of the falls has been to make equities cheaper and to begin to attract interest accordingly. So investors who believe that the credit crisis will ultimately be manageable are at least thinking about looking to find bargains even if they are far from certain that recent volatility is over. "During periods such as this investors cannot afford to be complacent," Paul Niven, head of asset allocation at F&C Investments, said in a note.
He added, however: "We may well see some further downside in equity markets in coming days and weeks but upside risks to the end of the year, from current levels, lead to interest in adding to equity positions at current levels."
Peter Toogood, chief investment officer at Forsyth Partners, noting that stock valuations are "compelling", echoed the sentiment in a note. "We are not blase about the risks, but opportunities never present themselves in the good times," he said.