Fears that the global economy will plunge into another recession have been exaggerated, according to investment strategists.
Instead, the world recovery is expected to continue but at a slower pace while markets remain very volatile.
"While global leading indicators have softened, major indicators remain clearly positive, making a double-dip recession very unlikely to take place," Credit Suisse Private Banking's head of global equity and alternatives research Lars Kalbreier said.
"We see some weaker growth in developed markets being compensated by solid growth in emerging markets."
Based on a medium-term investment horizon, Credit Suisse Private Banking continues to recommend investors have an overweight position on stocks and alternative assets, particularly commodities.
The firm recommended an underweight to fixed income and cash.
AMP Capital Investors head of investment strategy and chief economist Shane Oliver said that markets may experience weakness as tensions escalate over the state of the global economy.
"However, beyond the likelihood of another round of near term share market weakness we remain of the view that a double-dip recession globally will be avoided," he said.
"And with shares very good value, monetary conditions set to remain favourable and China likely to start relaxing its tightening measures sometime in the next few months, shares are likely to stage a decent rally in the December quarter and then through 2011."
UBS Wealth Management's head of investment strategy George Boubouras said the chance of a double-dip recession was unlikely.
"Historically it is very rare that a double dip recession eventuates and when it has occurred in the past it has been a function of the wrong policy settings - specifically the tightening of policy," he said.
"Current global monetary policy settings remain very stimulatory.
"We believe that while volatility may be elevated it will be lower than the May-June period as investors accumulate deeply discounted quality exposure."
UBS expects the S&P/ASX 200 Index to reach 5250 by the end of the year.
