Nomura sees 'golden age

Nomura, the Japanese banking giant, is predicting a new 'golden age' for the world economy in an astonishing reversal of its bearish stance a year ago.

Its respected market guru Anais Faraj says: 'We appear to to be about to repeat the benign "Goldilocks" period that spanned 1955-1974, when the world experienced a virtuous cycle of productivity growth that outpaced infla tion, low long-term interest rates and a series of bull markets [of varying quality] in the United States, Western Europe and Japan.'

Central to Faraj's thesis is his belief that the global economy is no longer wholly dependent on the health of the US and that, as in the 1950s and 1960s, key markets such as India, China, Brazil and South Africa are all taking off at the same time.

'This feels like the scenario of 40 years ago when West Germany, the States and Japan were all moving ahead rapidly in tandem.'

Faraj contends that, contrary to popular wisdom, the world economy is not running on the back of the US consumer; growth and investment flows between emerging markets are the driving force. For example, 'Latin American share prices are incredibly geared to Chinese growth; the same dependence can be seen in Australia, Canada and the Nordic markets.'

Meanwhile, South Africa, Turkey and Russia are growing - partly because of stronger domestic demand.

Nomura will tomorrow publish its global strategy note and predict that the FTSE 100 should end the year about 10 per cent ahead, at 5,300. Faraj accepts that the American stock market could yet fall sharply, but points out that for the first time more than half of world's GDP (56 per cent) is accounted for by emerging markets.