Asian Markets Likely To Rebound In 2019: 5 Picks

U.S. equity markets ended close to their 52-week lows in Dec 20 trading, largely dragged down by Federal Reserve’s decision to hike its benchmark interest rate and the possibility of a government shutdown. Broader macroeconomic factors and the volatility in the financial markets were responsible for the continuing losses as well.

Given the recent turbulence in U.S. equity markets, it might be a good idea to turn your attention toward Asian and emerging markets, which have a good performance outlook for 2019.

Morgan Stanley is “Outright Bullish” on Asian Markets

China’s new accommodative monetary policies could boost Asian markets next year, per a Morgan Stanley report released on Dec 20. The investment bank said that after declining in late October and early November, Asian markets could turn around in 2019.

Jonathan Garner, Morgan Stanley's chief equity strategist for Asia and emerging markets, said, "The Chinese monetary cycle is diverging from the U.S. monetary cycle”.

Garner’s comments referred to the Federal Reserve’s quarter-point rate hikes on Dec 19 for the fourth time in 2018 and China’s central bank refraining from increasing its short-term borrowing rates the day after. He noted that markets will benefit from Beijing’s loose monetary stance.

China’s Monetary Easing to Aid Asia

In November, Morgan Stanley upgraded emerging market stocks to overweight from underweight for 2019, which means these are good investment options going forward. In contrast, U.S. stocks were downgraded to underweight. Garner noted that the investment cycle was shifting in favor of Asia markets, China in particular.

In addition to keeping interest rates constant, China also took new measures in order to boost its economic activity. Beijing lowered property mortgage rates in some of its cities and introduced a targeted policy tool to encourage lending to private and small businesses earlier this week.

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