EQUITY markets are likely to slip further this year as severed access to credit hurts the "real" economy and corporate earnings, said Mark Van der Kroft, who oversees US$70 billion in stocks at Robeco Group.

Van der Kroft, chief investment officer for equities at the Rotterdam-based asset-management firm, said companies and consumers will suffer for the rest of the year as lending dries up and economic growth slows down.

"The market is still not out of the doldrums, we expect a further correction this year," the manager said in an interview in Rotterdam last Tuesday. "The extent of the impact that the credit-market turmoil will have in the market is the one-million-dollar question. We are not quite ready yet to put all our money in."

Indexes in the United States and Europe have yet to recover from losses in the first quarter, when shares fell as banks piled up US$383 billion in losses from credit investments and investors braced for the possibility of a US economic recession, Bloomberg News said.

The Standard & Poor's 500 Index in the US is down 5 percent this year after falling as much as 12 percent. In Europe, the Dow Jones Stoxx 600 Index has dropped 12 percent in 2008.

Fund climbs

The MSCI World Index, a global benchmark, reached a record on October 31 and fell to a 17-month low on March 17. Since a rally that started in March 2003, Van der Kroft's Rolinco NV managed fund has risen 47 percent, according to Bloomberg data.

That topped the 10 percent gain in its benchmark, the Citigroup PMI Growth World Total Return in euros. The 43-year-old fund focuses on a "growth" style, favoring businesses that sacrifice dividends to finance expansion.

Robeco has a "neutral" position in equities, meaning it matches the weight of shares in asset-allocation models, Van der Kroft said. The firm raised its bet on stocks to "overweight" between "mid-March" and "early May."

"Economic data will worsen with record oil prices, slowing consumption and house prices falling," Van der Kroft said. "If you buy based on these low valuations, you could get caught in a downside move in the next few months."

The MSCI World earlier this year reached its lowest value relative to its members' earnings since at least 1995.