Developed market and Chinese equities currently represent sound investments, said Barclays Wealth in its monthly Compass report.

The global economic recovery is progressing nicely, despite the recent downgrading of the US credit rating by Standard & Poor's and rising oil prices, said the UK wealth manager.

An improving labour market should bolster consumer confidence despite the high oil price, and improved consumer sentiment should combine with reasonably-priced commodities and gradually normalising interest rates to allow corporate profits to keep growing, said Barclays Wealth. Developed market equities therefore represent a promising investment as they are currently “particularly inexpensive”.

Despite concerns about China’s economy overheating, the bank recommends both short-term and long-term investors invest in Chinese equities as it believes the government’s latest Five Year Plan, which aims to promote sustainable economic growth, will succeed. In addition, China’s MSCI price-to-earnings multiple is 11.6 times, below its 5-year average and below the MSCI Asia ex-Japan price-to-earnings multiple of 13.0 times.

Barclays Wealth currently recommends allocating 43 per cent of investment to developed market equities and 8 per cent to emerging markets for a moderate risk portfolio.

Kevin Gardner, head of global investment strategy at the firm, also recommended buying Swedish krona and selling Swiss francs. “The Swedish economy continues to grow and interest rates are rising, while the overvalued Swiss franc is likely to dampen that country’s economic growth and keep interest low,” he said.