NEW YORK (Reuters) - The U.S. stock market will likely outperform all other global equity indexes in 2008 as a riskier investing environment will make its relatively low valuation and heavier volume more attractive, a top U.S. equity strategist said on Wednesday.
The Standard & Poor's 500 index is set to end the year at 1,450, or about 7 percent above its current level, Tom Lee, chief U.S. equity strategist at JPMorgan Securities, told the Reuters Investment Outlook Summit in New York.
"I think the U.S. is looking as the least risky equity class," said Lee. U.S. stock markets are the most regulated compared with their overseas counterparts and that should provide comfort to investors as turmoil in global financial markets hurts corporate balance sheets, he added.
"In volatile times, disclosure is really important," Lee said. "In February I was hosting a panel with several hedge funds and what they said is they have been so glad for Sarbanes-Oxley -- this is the only time -- because they realize companies' CFOs can go to jail if they lie."
The Sarbanes-Oxley corporate and accounting reform law was passed in 2002 after the Enron accounting scandal, and other accounting fraud scandals.
Year-to-date, the S&P 500 is down 8.3 percent, nearly equal to losses on Japan's Nikkei .N225. Europe's main benchmark, the FTSEurofirst 300 , is down by nearly twice as much.
Emerging market indexes, which largely outperformed the United States by a wide margin last year, are split so far this year. China's Shanghai Composite Index .SSEC has far outpaced losses on the S&P 500, tumbling 41.6 percent year-to-date. Latin American benchmarks, meanwhile, are ahead of the S&P 500, with Brazil's Bovespa .BVSP up about 5 percent and Mexico's IPC index .MXX around 4 percent higher year-to-date.
"The EM story is less clear-cut," Lee said of the outlook for emerging markets. "Now you're starting to see the inflation, which was really nailing U.S. households for the better part of the last 12 months, is now really start to boil in emerging markets."
(For summit blog: summitnotebook.reuters.com/)
(Reporting by Jennifer Coogan; Editing by Leslie Adler)
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