By The Nation
Citi analysts are expecting global earnings per share to grow by 9.7 per cent in 2019 and forecast the bull market has not ended even if it is in the late cycle, with an emphasis that this is not the start of a downturn.
They remain overweight equities and prefer emerging market, particularly Asia that targeted 4.5 per cent economic growth in 2019, and Europe-ex UK. Citi analysts believe it is still too early to turn defensive and prefer technology, health care and materials. Citi recommended diversified high-quality portfolios that can provide a buffer in times of volatility.
In addition, Citi analysts point out uncertain factors that investors should consider such as political uncertainties in each region, trade wars and geopolitical risks and interest policy global currencies.
Don Charnsupharindr, the retail banking head at Citibank Thailand, said the overall global economy in 2019 was expected to slightly slow down, from 2018, to 3.1 per cent as a result of global events and economic factors which have been unstable during the past year. Downside risks to growth include monetary policy divergence across markets, the rise of protectionism and trade tensions, heightened political risks and Chinese or US slowdowns. The emerging markets trend is to grow by 4.5 per cent in 2019 and 4.6 per cent in 2020, while developed markets are forecast to grow by 2 per cent.
Don added that in terms of currencies, Citi expected the US dollar to weaken as a result of the fading impact of Donald Trump’s late cycle fiscal stimulus. The baht is likely to strengthen within the frame of Bt32.7-Bt33 against the dollar.
Citi expected the United States’ Federal Reserve to hike its policy rate twice more in 2019. The European Central Bank and Bank of Japan were forecast to maintain their interest rates under strict monetary policy.
Furthermore, risks to global growth that investors should consider are political uncertainty in each region and current global trade tensions which remain elevated with markets focused more on geopolitical headlines. As a result, despite a still favourable global economic outlook, it is predicted that the global growth is likely to slow.
Citi analysts suggest that investors remain diversified their portfolios by investing in various asset classes. Citi recommend alternative investment and diversified multi-asset class portfolios and remain overweight equities and underweight bonds.