Morgan Asset Management: Expects the Hong Kong A-share market to outperform Asia in the second quarter and is confident in the consumer sector
XU Changtai, Chief Market Strategist for Morgan Asset Management in the Asia-Pacific region, expects the Hong Kong A-share market to outperform the Asian market in the second quarter, especially compared to the Japanese and Indonesian markets. He is optimistic about the consumer sector and predicts that the U.S. will cut interest rates three times this year, totaling 0.75%. XU believes that the U.S. economy will not experience a severe recession, but growth will slow down, and the Federal Reserve may lean towards cutting rates to safeguard the economy. He will adjust his view on the stock-bond ratio to 5:5 and recommends investing in fixed income assets and alternative assets
According to the Zhitong Finance APP, Xu Changtai, Chief Market Strategist for Asia Pacific at Morgan Asset Management, stated that he expects the mainland and Hong Kong markets to outperform Asia in the second quarter, positioning themselves ahead of Japan and Indonesia, due to the earlier signals released by the mainland government that are friendly to technology companies and the search for AI development opportunities, as well as the potential to stimulate the economy through demand. He is relatively confident in the consumer sector.
Xu Changtai anticipates that the U.S. economy will not experience a further severe recession, but a slowdown in growth is inevitable. He expects the U.S. to cut interest rates three times this year for a total of 0.75%, likely in September, October, and December. If a rate cut occurs in June, recent employment data would need to be poor, but currently, there may not be enough data to support that. He also mentioned that even though the Federal Reserve faces a dilemma with rising inflation and slowing economic growth, he personally believes that the Federal Reserve will tend to cut rates to safeguard the economy.
He continued to state that the stock-bond ratio view will shift from 6:4 to 5:5. Among them, while U.S. stocks will still "not give up," positions can be adjusted downwards, such as being cautious about non-essential consumption and industries with high import and export relevance. He is also more cautious about the semiconductor industry in the short term. In terms of fixed income assets, government bonds and investment-grade bonds still present attractive investment opportunities, and he also recommends considering investments in alternative assets such as real estate, transportation, and infrastructure.
He also expects that if policy instability continues to increase, the U.S. dollar may continue to depreciate, which would slightly benefit Hong Kong's service industry and assets.
Regarding the continuous rise in gold prices, Xu Changtai believes that consideration should be given to gold allocation, due to the lack of interest income