US and Japan stocks to perform well on economic recovery prospects: OCBC

Developed economies such as the United States and Japan are expected to continue on the road to recovery, which bodes well for equity markets there, said OCBC analysts.

Conversely, policy headwinds in China - including the central bank's recent moves to tighten liquidity - might mean tougher times ahead for Asian markets in the short term.

The analysts were speaking at an investment seminar on the bank's outlook for the second half of the year, held at the Ritz Carlton on Tuesday.

Despite market turbulence last month amid concerns that the US Federal Reserve might begin to taper its aggressive monetary stimulus, OCBC's head of group wealth products Marc Van de Walle said the US economy is showing signs of recovery, and the equity market is expected to continue performing well despite tapering.

"It was a knee-jerk reaction to Ben Bernanke's announcement that the Fed might begin tapering, and a sign that the market is nervous...investors should expect more volatility in the months ahead," he said.