State Street Global Advisors (SSGA) sees scope for moderate global economic growth over the medium-term thanks in part to an accommodative policy stance from the US Federal Reserve (Fed), the firm said in its 2019 mid-year global market outlook.
The tit-for-tat tariffs between the US and China means that trade risks have been in sharp focus in previous months. However, the asset management arm of State Street Corporation sees potential for the economic cycle to extend, particularly in the US given its current momentum.
“Last December, markets became overly concerned about the outlook for global growth, thanks to the impact of the US-China trade conflict and what many saw as the Fed’s overly hawkish tightening schedule,” said Lori Heinel, deputy global chief investment officer for State Street Global Advisors. “Today trade risks persist, but the policy stance has shifted.”
SSGA also identified India and China as areas of opportunity in the equity and debt space.
Kevin Anderson, head of investments in the Asia Pacific region at SSGA said: “Emerging markets are attractive and the long-term growth story is intact, although risks remain with the ongoing US-China trade dispute.
“For fixed income investors, higher-yielding emerging market debt should drive long-term returns despite local currency volatility in the short run. Overall, the stabilisation of the Chinese economy is also positive for emerging markets,” added Anderson.
Earlier this month
the London-Shanghai Stock Connect launched, allowing Chinese investors to purchase stocks listed on the London Stock Exchange. Companies listed in the UK can now also sell shares in mainland China.
Foreign investors are looking to access China for its compelling fundamentals, giving them exposure to a diverse, complementary group of companies, industries and economies at various stages of development.
©2019 funds global asia