On January 8th , the latest strategy report from Julius Baer pointed out that Asia will continue to benefit from the favorable investment situation in 2015. The reason lies in the following three points: the long-term high correlation between Asian and European markets and the good prospects for the latter next year; the relatively loose monetary policy to be maintained by the world’s major central banks; the reasonable valuation in Asian stock market.
The analyst in Julius Baer anticipated that China and India will become Asia’s best performing economies thanks to the diverse reform initiatives. Meanwhile, Japan’s performance can be expected as well, thanks to the local QE policies and the re-adjustment of pension allocation. In addition, the recent fall in oil price will benefit the economy in almost all Asian countries, enabling the government to apply the existing fuel subsidies to the fields that can enhance more the productivity, such as education and infrastructure, in order to further promote the long-term economic development.
Julius Baer emphasized that in addition to China’s A-shares, the other major Asian markets are highly correlated with the US and European market trends. Julius Baer Strategy Head Christoph Riniker predicted that next year the total return of the S & P index is about 4%, the return of the German Frankfurt DAX index is about 7%, which indicated that the overall market environment is quite favorable to the Asian markets. In view of the United States and Europe are the world’s two most important economies, the US Federal Reserve and the European Central Bank’s policies are very significant for the Asian economies and markets and currencies. The US FED led by economic liberals, the positive but not high economic growth and the low inflation have prompted the United States to launch the “normalization” process of interest rate in a slow and gentle pace. At the same time, the economic growth of the euro zone in 2015 forecasted at only 0.8%, the ECB’s loose monetary policy is bound to last longer.