THE bull market in Asian stocks has longer to run, say analysts at Citibank Thailand, even though they note the market has reached a late stage in the investment cycle.
Citi analysts remain overweight equities and prefer emerging markets, particularly in Asia, which is heading for economic growth of 4.5 per cent this year, Don Charnsupharindr, director and retail banking head at Citibank Thailand, said yesterday.
Asian market valuations are attractive as some investors in the so-called real sectors can buy equities at about a 50 per cent discount, according to Citibank, which launched a partnership with Fidelity International yesterday. “The bull market is in the late cycle,” said Don, referring to the global equities markets, during the launch of the partnership.
He said that growth in the overall global economy in 2019 was expected to moderate from that of 2018, to 3.1 per cent, as a result of global events and economic factors that have brought instability over the past year.
The risks to growth include monetary policy divergence across markets, increased protectionism as part of broader trade tensions, heightened political risks and a slowdown in China and, potentially, the United States. Emerging markets are forecast to grow by 4.5 per cent in 2019 and 4.6 per cent in 2020, while developed markets are forecast to expand by 2 per cent and 1.7 per cent, respectively.
Don said he expects weakness in the US dollar as a result of the fading impact of President Donald Trump's late-cycle fiscal stimulus. The baht is likely to strengthen in the range of 32.70 to 33 to the dollar. The United States' Federal Reserve is expected to raise the its policy rate twice more in 2019. The European Central Bank and the Bank of Japan are maintaining their interest rates under strict monetary policies.
The stock markets in Asia may face volatility but there is a high chance of increased capital inflows into the region, Don said.
Citibank Thailand and global investment manager Fidelity International yesterday introduced five flagship mutual funds: Fidelity Funds - Global Dividend Fund, Fidelity Funds Emerging Markets Fund, Fidelity Funds Asian High Yield, Fidelity Funds China Yield Fund and Fidelity Funds Global Technology Fund.
Don said he expected that the number of Citibank's Thailand-based clients would grow more than 20 per cent this year, after achieving 20 per cent growth last year.
Wildon Goh, wholesale director at Fidelity International's Southeast Asia division, said the Global Dividend Fund will select listed companies that offer high dividend payments, of about 3 per cent, for several years. Regarding investment in bonds, he said high-yield debt in China has offered higher returns than Chinese equities over recent years. Fidelity’s Asian high-yield fund offers investors the benefits of diversified investment portfolios in the region, said Goh.
Don said that Thai investors should consider buying investment-grade bonds and that high-yield funds would be a good option as they could limit investors to individual high-yield bonds.