Zurich, Basel, 9 December 2009 

UBS Wealth Management and Swiss Bank, Wealth Management Research has just published its economic and financial market forecasts for 2010 in the annual UBS global outlook. In 2010, UBS Wealth Management Research expects emerging market equities to post the highest returns of all the asset classes it covers. 

• Although one of the most volatile asset classes, emerging market equities will likely deliver a return of approximately 15% in 2010.

• Commodities are poised to perform well as economic growth revives and drives higher demand. They also offer important diversification benefits, making them attractive given the uncertain inflation outlook.

• Looking at currencies, Wealth Management Research expects the US dollar to remain weak, while emerging market and commodity-producer currencies should stabilize at even stronger levels than in 2009.

UBS Wealth Management Research expects the global economy to continue its recovery. "However, the road ahead will be bumpy," according to the authors of UBS global outlook, because considerable economic risks persist. The timing of central bank rate hikes will be critical since a tightening of monetary policy could trigger setbacks in financial markets.

In Wealth Management Research's view, favorable valuations suggest that investors should remain exposed to corporate securities at the beginning of 2010. As the year advances, it will be important to determine whether earnings have truly embarked on an upswing.

Emerging markets are likely to continue offering strong growth opportunities. Although their performance may be uneven due to the underdeveloped states of their financial markets, Wealth Management Research expects well-targeted investments in emerging markets to generate attractive returns.

According to UBS analysts, emerging markets equities should offer average returns, including dividends, of approximately 15% in 2010 while developed markets equities should post returns of approximately 10%. Eurozone and UK equities appear to offer the best value among developed equity markets. Given the outlook for a recovery in economic activity and business sentiment, Wealth Management Research favors the Energy, Materials and Information Technology sectors for next year.

Commodities to perform as economic growth revives and drives higher demand

They also offer important diversification benefits, making them attractive given the uncertain inflation outlook. Wealth Management Research expects commodities to return an average of 10% in the coming year. In the first half of the year, crude oil prices are expected to move higher amid continued strong demand.

In contrast, Wealth Management Research expects government bonds to post poor returns during 2010. In the report, UBS experts favor "reducing overall exposure to them and advise against long-dated maturities." The report acknowledges that government bonds can still play an important role for investors, shielding them against extreme event risks. It advises cautious investors to shift some of their government bond exposure to investmentgrade corporate bonds with medium-term durations, while advising investors with greater risk tolerance to consider high-yield corporate bonds. Wealth Management Research notes that emerging markets sovereign debt denominated in foreign currencies could also be interesting investments next year. On average, these bonds have become much safer in recent years, and upgrades should continue in 2010. Although valuations were less attractive toward the end of 2009, Wealth Management Research bond analysts do not regard current prices as expensive when taking the improved economic fundamentals of emerging markets into account.

Looking at currencies, Wealth Management Research expects the US dollar to remain weak in 2010, while emerging market and commodity-producer currencies should stabilize at even stronger levels than in 2009.

UBS global outlook presents a concise but comprehensive overview of the major economies, asset classes, markets and currencies in the year ahead. It also contains insights on special topics of interest to investors, such as "Balancing opportunities and risks" and "Can Asia carry the world on its shoulders?" UBS global outlook is an essential guidebook for investors.

Ends --

www.ubs.com/globaloutlook