Investors can expect the “best” returns from Asian stocks in the first half of 2019 as negative sentiment from last year subsides, a J.P. Morgan strategist said on Thursday.
“We’re expecting more upside in the first half … I think the best part of the returns you’ll have in Asian equities will be in the first half,” Mixo Das, Asia equity strategist at J.P. Morgan, told CNBC’s “Street Signs.”
At end of last year, investors were worried about multiple factors that could pressure stocks, including a potential recession in the U.S., slowing growth in China and the tariff fight between the world’s two largest economies. Those concerns led to a sell-off in global markets, with stocks in Greater China, Japan and South Korea among the biggest losers in Asia.
But many of those events that investors feared could happen this year have not turned out to be as bad as expected, Das noted.
“At we get more clarity on the U.S.-China trade deal, China’s growth bottoming out at some time in [the first] half, and the U.S. economy averting a recession in 2019 — all these things essentially will reinforce that risks are coming down and that’s why equities are going to be going higher in the first half,” he added.
The strategist added that he prefers “value stocks” — those trading a price below where investors think it should be — in the first half of this year. He also favors shares in China, Singapore and the Philippines.
But growth in company earnings could weaken in the second half of the year, partly due to disruptions on the trade front, which has started to hit economic activity worldwide, said Das.
With little good news to lift regional stock prices beyond the first six months of the year, the strategist added that “growth stocks” — firms seen to have a lot of potential to expand — would be his preferred picks. Das said such an environment could make growth stocks “the best performers over the course of 2019.”