Citigroup Asset Management yesterday expressed a better-than-expected view on the global economic recovery next year, ruling out the possibility of a recession, according to Vincent Chen (陳家豪), head of the group's retail business.
"The global economic uptrend will continue with a mild recovery [next year]," Chen said at a presentation on the economy yesterday afternoon.
"The future economic recovery is expected to transform from a customer-led one to a more solid rebound backed by corporate expenditures and investments," Chen said.
Based on the bank's economic forecast, Chen advised investors to change the emphasis of asset management portfolios to undervalued equities rather than bonds.
The bank further upgraded its view on equities in the emerging Asian and US markets from "neutral" to "overweight" and "minor overweight," respectively, while downgrading its outlook on the global bond market.
Chen advised the benchmark on stock investments in emerging markets be raised from the previous 5 percent to around 8 percent due to expected high growth and returns.
Citigroup, however, remains neutral on equities in Japan and other Asia-Pacific markets, while downgrading its outlook on European equities, which while cheap, should see lower growth and returns, Chen said.
Since global stock performance is expected to fluctuate in the fourth quarter and many investors may close deals to lock in profits, Chen advised investors to bottom fish and refrain from rushing into stocks before the expected market upturn next year.
Although the bank has revised down its forecast for US economic growth this year, from 4.6 percent to 4.3 percent, Chen expressed confidence in the US economy, saying corporate earnings are improving and the impact of expected interest-rate increases should be mild.
The bank further expects the US Federal Reserve to continue to raise interest rates to 2 percent by the year's end, Chen said. US interest-rate increases will last into the first half year of next year, with the rate staying around 3 percent, he said.
Although crude oil prices have skyrocketed recently to over US$50 per barrel, the bank estimates that oil prices will come down to between US$30 and US$35 per barrel next year, Chen said.
Chen also said that the bank expects the US government will soon release its 95 percent-full strategic oil reserves, which will have a profound psychological impact on oil supply speculation.
The bank, in addition, estimates that an economic slowdown in China, which has the second highest oil demand growth in the world, may further drive down oil demand.
With oil prices rising, Chen expressed a bullish view on the performance of oil and energy-related stocks, adding that biotech equities and shares of companies with high dividends will be the mainstream market's investment targets.
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Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day