By UMA SHANKARI

OCBC Wealth Management remains positive on equities for 2010, but says markets are likely to be in for a bumpy ride.

'Low global interest rates and the abundance of liquidity should provide equity markets with support, as investors who missed the boat use their idle funds to buy on significant pull-backs,' it says in its market views report for January 2010.

However, there are still concerns, according to OCBC. For a start, while there are signs of economic improvement, it remains unclear whether this can be sustained without more government support. And the risk of sovereign credit downgrades, especially in Europe and even the US, is also something to worry about, as it could curtail the ability of governments to borrow and spend to aid economic recovery.

But despite these concerns, OCBC reckons low interest rates and high liquidity should support equity markets, at least in the first half of 2010.

In the equities space, it remains most positive on the Asian region excluding Japan, which is expected to enjoy stronger economic and earnings growth than developed markets.

OCBC is also positive on commodities in the medium to long term, but says punters must have a strong risk appetite as this sector is very volatile.

'For those looking to invest at this juncture, we maintain our suggestion to buy gradually over the coming months to ride out the uncertainty and volatility in markets,' it says.

It adds that while it prefers equities to bonds, this does not mean investors should have no bonds in their portfolios.

'Opportunities can still be found among investment-grade corporate bonds, especially in Asia, as economic recovery gathers momentum in the region, credit risk premiums are likely to decline, which could augur well for Asian credits,' OCBC says.

As for currency markets, it feels the Australian dollar will 'still present good opportunities in 2010'.

Significant pull-backs in the Aussie dollar should be seen by US-dollar holders as an opportunity to switch into the currency, it says.