DBS Bank is upbeat on global stocks despite some fears that a reduction by the United States of its vast money-printing programme may subdue markets.

Mr Lim Say Boon, chief investment officer for group wealth management and private banking at DBS, sees cause for optimism.

He said that rather than being driven by the slush of money worldwide, shares will be driven by economic growth and expansion in earnings.

"Equities will move from a liquidity to a growth phase (as the) global economy strengthens," he told a briefing yesterday.

"Earnings growth (will) favour developed markets."

Mr Lim is "overweight" on equities worldwide. He prefers developed market shares - at least for the next three months - over those in emerging markets.

In the US, the Federal Reserve said last month that it would reduce its rate of monthly bond purchases from this month, a cut known as "tapering".

But Mr Lim noted that the Fed assured markets its benchmark interest rate will stay low.

"The rate guidance will retain market confidence that money will remain cheap," said Mr Lim, who is "overweight" on US shares on both a three-month and 12-month basis.

Yields on US government bonds - known as Treasuries - will rise but the gains will likely be limited, he added. They may not drag down the stock market much, as some people fear.

"There's probably more room for US Treasury yields to go up without interfering with (stock) valuations," said Mr Lim.

"Valuations probably have more room to rise along with the 10-year US Treasury yield as the economy recovers." He said that after a certain level, yield rises "start being toxic" for the stock market, but reckons "we are still some way away from that".

Mr Lim said yield rises start being bad for stocks only when the 10-year Treasury yield moves towards 6 per cent, which is almost double from its current level.

He said that US companies are reviving investments and that US consumer confidence is returning.

Mr Lim also likes European stocks, citing a cyclical recovery from the recession and gradual quiet "structural healing" there.

"Euro-area corporate earnings should play catch-up with the US," he said.

He is also "overweight" on Japanese shares. Japan's central bank is on its own drive to print money and expand the economy's money supply. Mr Lim said this will weaken the Japanese yen further.

He noted a close correlation between the US dollar-Japanese yen exchange rate, and the movements of Tokyo's Nikkei 225 stock index. The Nikkei tends to rise when the yen weakens against the dollar, and share prices fall when the yen strengthens.

When it comes to emerging market equities, Mr Lim is "neutral" over three months but "overweight" over 12 months.

But he is far less upbeat on bonds. In developed markets he prefers corporate bonds to government bonds, and high-yield debt over investment-grade bonds.

He is "underweight" on alternative investments such as gold.

"We continue to be outright bears on gold. A rebound is going to take place over the next few weeks or so; we'll let that play out but after that it is going to go even lower."

He said gold will head down towards US$1,180 per ounce and go even lower. It was at US$1,233 per ounce yesterday.

Phillip Futures investment analyst Joyce Liu said in a note that gold's rebound may continue to US$1,280.

In the mid-term, she is also bearish on the metal.