Investors have reason to look up with the dollar rallying and falling energy prices, according to the latest investment outlook by Bermuda Investment Advisory Services (BIAS).

The report reveals that despite more financial sector write-downs, the overall profit picture does not make completely grim reading, with eight out of 10 Standard & Poor's sectors recording positive earnings gains, allied to the dollar hitting a six-month high against the euro and the pound suffering its longest run of losses versus the dollar in 37 years.

BIAS said the stock market had also corrected about 20 percent from peak to trough, historically defined as a full 'bear market', and world markets were trading at "much more reasonable" valuations than less than one year ago.

The Hamilton-based investment specialists also pointed to the fact that although there was slowing global growth, emerging market development continued to be a strong secular trend.

In particular, it said, China was undergoing an industrial revolution, but instead of the 100 million people in the US at the beginning of the last century, this time it will involve more than one billion people.

Meanwhile it is expected that more than $20 trillion will be spent on emerging market infrastructure, including airports, power plants, roads, bridges, water facilities and property development, with Brazil, India and possibly Russia participating as well.

Further findings showed that the side effects of this trend during the next five years included higher commodity price rises, with the global economy currently seven years into a 10- to 12-year cycle.

The study went on to highlight the importance of "trading the market" and being "opportunistic", as commodity and emerging market trades become more crowded.

In order for the markets to operate to their full potential, it noted that oil prices needed to stablise as they had done over recent weeks, while real estate prices must stop dropping to balance the financial system.