It follows upgrades on the outlook for emerging markets, loosely defined as more recently industrialized nations – including China, much of Southeast Asia and Latin America – from J.P Morgan Asset Management and Morgan Stanley last month.
“As we look towards 2020, we’re looking towards ex-U.S. equities,” said Evan Brown, head of multi-asset strategy at UBS Asset Management.
He called out credit, especially Chinese and Asian bonds as a “prize pot” opportunity away from expensive developed markets’ debt and said the U.S. dollar was overvalued and likely to fall.
“You’re going to see an improvement in ex-U.S. growth and the U.S. economy still doing OK, but not outperforming,” he said.
Brown declined to specify the manager’s emerging markets equity exposure in detail, but said: “We would allocate a few percentage points more relative to the U.S.,” and that it was reasonable to expect low double-digit returns next year.
World shares are not far from all-time highs as easy monetary policy and confidence the United States and China can strike a deal ending their trade war has investors optimistic.
