Schroder Investment today (6th) released the top ten forecasts for 2024, Schroders Asia multi-asset investment head Keiko Kondo said that he believes that the global economy is expected to record positive growth in 2024, and is bullish on the Asian market, especially at the currency level, the yen is expected to strengthen against the euro. However, she said that due to many concerns about the local economic model, overseas investors may not have enough motivation to choose the Chinese market, and should be more hesitant and conservative, so they look forward to Asian stock markets outside China.
There is hope that global inflation will slow down, but the pace is not expected to be very fast. For the U.S. interest rate cut, she is even less optimistic than the market generally expects, bluntly saying that if the U.S. economy does not have a recession, the market expects more than 5 interest rate cuts, and there should only be about 3 times.
Keiko Kondo predicts that the yen is expected to reach a "turning point" in 2024. (File photo)
Hidden worries in the domestic housing and slow economic recovery are not optimistic about China's stock market
At the level of the Asian market, Kondo argues that she is more optimistic about Asian currencies than the US dollar and the yen more than the euro. She said that the European economy's manufacturing and services PMIs are now below 50, meaning the economy is actually falling into a weaker state and the ECB may be more forced to consider cutting interest rates than the US. As a result, currencies in the Asian market are expected to turn around, especially the yen against the euro, which is expected to usher in a "turning point".
However, she is not very optimistic about the Chinese market, Kondo Keiko bluntly said that China's stock market is weak in the generally optimistic Asian market, although the mainland PMI has a stable trend, but as an overseas investor, the recovery of the mainland economy can not satisfy overseas investors, and there are many hidden worries about the real estate and other problems, and the attitude of overseas investors towards the mainland economy is actually hesitant and wait-and-see.
Keiko Kondo said she is optimistic about the S&P 500 index for U.S. stocks. (File photo)
The number of U.S. interest rate cuts is not as optimistic as the market, and the S&P 500 is expected to do well
Kondo said that inflation forecasts for 2024 will slow but may remain at a high level of about 4% for a long time, and the Fed has expected inflation to fall back to 2%, and she believes it will take time to reach this target. On the issue of high interest rates, the market expects that the United States should have five interest rate cuts next year, and she particularly reminded that the premise of such expectations needs to be that the U.S. economy has shown signs of recession, but in fact, the U.S. economy may not have a more significant recession, so the number of interest rate cuts does not need to be as optimistic as the market estimates, and it is expected that there should only be about three interest rate cuts.
For U.S. stocks, Kondo said that with the increase in artificial intelligence (AI) applications to increase productivity, it is believed that innovative technology-related industries can be boosted, and the U.S. stock market is expected to benefit, and the performance of other U.S. stocks will also improve. In addition, compared to the Russell 2000 index, U.S. high-yield bonds are also praised by Schroders.
Gold, private equity assets balance risk clean energy is expected to be good due to the war
In addition, Schroders' rest of the forecast is bullish on gold; Bullish on the theme of clean energy; Bullish on private assets. It explained that gold and private equity assets can be used to diversify risks, and after the war has caused oil prices to rise, countries may accelerate the development of new energy and drive the improvement of related sectors.