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Market fears of recession may be overblown, with China and US stocks set for rebound in 2019, analysts say

  • Much of the bad news that rattled global markets in 2018 has already been reflected in share prices, analysts say
  • Meanwhile, Standard Chartered assigned a 30 per cent probability of a global recession in 2019

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US stocks could take heart from a pause in the Federal Reserve’s interest rate tightening programme after another three quarter-point rate adjustments, analysts say. Photo: AP

Equity markets globally are poised for a challenging year in 2019, weighed by uncertainties ranging from the US-China trade war to a growing list of gloomy economic indicators, yet it could add up to a year of opportunity for nimble investors, according to analysts.

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Much of the bad news that rattled global markets has already been reflected in share prices, analysts say, noting that valuations are more reasonable, and should remain so as long as policymakers can steer the global economy around a recession.

“We believe there is a danger that investors have now become too pessimistic and that investor fears of a global recession are overdone,” said Fan Cheuk Wan, chief market strategist in Asia of HSBC Private Banking. “After a turbulent 2018, bearish expectations, lower valuations, and conservative investor positioning should help see an equity market bottom in the coming months, and a recovery later on in 2019.”

Jason Liu, vice-president and head of chief investment office in Asia at Deutsche Bank Wealth Management also said he was more optimistic than most investors.

“When we look back at four recessions in the past, the real recession typically comes 500 days after an inverted yield curve appeared, and 300 days after a peak in interest rates, which is a year and more from now,” Liu said at a media briefing last week.

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