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 accomodative 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.
The investment bank also expects emerging markets such as India, China, Brazil and Indonesia to put up a good performance in the latter half of 2019.
Asian Countries to Emerge as World’s Fastest Growing Economies
According to an HSBC report released in September, China could overtake the United States to be the world’s largest economy by 2030 and India could reach the third position, leaving Germany and Japan behind. In addition, emerging nations could account for half of global GDP in 12 years.
While China is likely to contribute the most to global growth, some Asian economies such as India, Indonesia, Bangladesh, Philippines, Pakistan and Vietnam could be the fastest growing Asian economies globally.
5 Stocks to Buy
Noting the broadly encouraging factors for Asian markets, it might be prudent to invest in some Asian stocks at present.
Woori Bank WF is a Korean financial holding company that offers banking and financial services.
The company’s expected earnings growth rate for the current year is 55.2%. The Zacks Consensus Estimate for the current year has advanced 18.4% over the past 60 days. The stock carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
WNS (Holdings) Limited WNS offers data, analytics, business transformation and voice services globally.
The company’s expected earnings growth rate for the current year is 11.6%. The Zacks Consensus Estimate for the current year has advanced 6.4% over the past 60 days. The stock carries a Zacks Rank #1.
POSCO PKX manufactures hot and cold rolled steel products, heavy plate and other steel products for the construction and shipbuilding industries.
The company’s expected earnings growth rate for the current year is 20.7%. The Zacks Consensus Estimate for the current year has advanced 7.3% over the past 60 days. The stock carries a Zacks Rank #2 (Buy).
HDFC Bank Limited HDB provides an array of financial and banking services in India, Dubai, Bahrain and Hong Kong.
The company’s expected earnings growth rate for the current year is 8.5%. The Zacks Consensus Estimate for the current year has advanced 1.5% over the past 30 days. The stock carries a Zacks Rank #2.
Autohome Inc . ATHM is an online platform for automobile consumers in China.
The company’s expected earnings growth rate for the current year is 33%. The Zacks Consensus Estimate for the current year has advanced 0.9% over the past 60 days. The stock carries a Zacks Rank #2.
In addition to the stocks discussed above, would you like to know about our 10 top tickers to buy and hold for the entirety of 2019?
These 10 are painstakingly handpicked from over 4,000 companies covered by the Zacks Rank. They are our primary picks poised to outperform in the year ahead. Be among the first to see the new Zacks Top 10 Stocks >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
WNS (Holdings) Limited (WNS) : Free Stock Analysis Report
Autohome Inc. (ATHM) : Free Stock Analysis Report
HDFC Bank Limited (HDB) : Free Stock Analysis Report
Woori Bank (WF) : Free Stock Analysis Report
POSCO (PKX) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research