Investors are advised to increase their holdings of some European and US stocks with potential growth, because these markets have gradually digested downside risks led by the eurozone’s debt crisis, Citicorp Securities Investment Consulting Inc said yesterday.
Meanwhile, Citicorp suggested investors add some emerging-market bonds and high-yield bonds to their investment portfolios.
“We did not change our view too much, compared with the first half of the year,” Citicorp vice president Spencer Wang (王進彰) told a media briefing.
Investors should divide their portfolio equally between equities and bonds in the near future, following global markets gradually factoring in the bad news from Europe, Wang said.
Wang was optimistic about the equity market in the US, saying the economy in the US was not as bad as some had expected.
While the labor market in the US has remained sluggish, it has contributed to lower labor costs, a positive indication for the manufacturing sector, Wang said.
In addition, a weaker rate for the US dollar against the New Taiwan dollar could also signal higher profitability from currency-rate differences for Taiwanese investors, Wang added.
Wang also suggested investors increase their holdings of European equities in certain countries such as Germany, because there was no need to worry too much about the eurozone debt crisis.
“Many European stock markets have shrunk too much on the impact of the debt problem recently, but there is no need,” Wang said.
Even if Greece left the eurozone, Wang said it would not pose a systemic risk to major stock markets in Europe.
Wang said investors should add holdings of US and European large-cap stocks over the near future to raise profits of their portfolios.
On the bond front, Wang said investors should buy some emerging-market bonds and high-yield bonds, but avoid increasing holdings of government bonds, because current prices for government bonds are too high.
Wang remained conservative on most of the equity markets in Asia in the second half of this year, except China, Thailand and Indonesia, because major emerging markets might face a downturn in the near future.