The global economy narrowly avoided a recession in 2019 and is showing signs of stabilizing, but prospects for the coming year are muted.
«The muddle-through environment is not exciting,» said Anthony Raza, UOB Asset Management's head of multi-asset strategy, about the consensus forecast for global GDP growth of 3.1 percent in 2020, which is at the bottom of the range for global growth in past expansions.
In this environment, UOBAM is taking more growth-focused investment positions, with a risk-balanced income strategy comprising investment-grade bonds and dividend growth equities for capital preservation and gain, Raza said at its investor outlook seminar on Thursday.
With downside risks mitigated, UOBAM recommends a neutral allocation to equities and to broadly stay invested in markets amid the continued expansion. It is also overweight on fixed income and alternatives, and underweight commodities and cash, as outlined in its investment strategy for Q1 2020.
Asia Prospects
Geopolitical concerns, which include U.S.-China trade relations, Brexit and the U.S. presidential elections, will continue to cast a shadow over the global economy, though Raza noted that geopolitics is rarely an issue that drives markets.
Several factors bode well for the continent: accelerating global growth, attractive Asian valuations, and high valuations and weak growth in developed markets, but the «outperformance checklist» for Asia also depends on a neutral/weak U.S. dollar, lower trade conflict risk, and expanding global trade, he said.
As such, the bank is neutral on Asia but is «keeping a careful eye on its prospects» as it has the potential to be a top performer.
