StanChart says 2019 in the year to 'prepare and react'

Standard Chartered Bank advised investors to diversify and scale back on risky assets in 2019, forecasting the global economy will slow and capital markets will be more volatile this year.

This year is “a year to prepare and react”, StanChart said in its latest outlook, advising investors to make portfolio investments and be watchful for potential macroeconomic shocks and geopolitical developments.

In particular, it sees increasing value in bonds and cash for the coming months and equities could have a strong turn of the year, especially in Asian markets excluding Japan.

But the longer-term risk-reward is deteriorating.

Ethan Wang, head of investment strategy at the wealth management unit of Standard Chartered Bank (China), expects the United States will see slower but steady growth in 2019.

And he forecasts the Federal Reserve will raise its benchmark interest rate twice — by 25 basis points each time.

StanChart remains positive on Wall Street's performance for the next six to 12 months, especially the energy, medical care, science and technology sectors.

It sees China's economy growing about 6.2 percent, from 6.5 percent last year, with domestic consumption as the driving force.

But is says trade tensions between China and the US are the biggest risk to the world's second largest economy.

StanChart is positive on China's A-share market, given the government's favorable fiscal policies, the attractive valuations of listed companies and the recent inclusion of A-shares in global equity indexes.

Jason Yu, head of North Asia multi-asset products at Schroder Investment Management(Hong Kong) Ltd, said that while the fundamentals for corporate earnings growth are positive, company investment strategies this year will tend to be conservative and cautious given the uncertainties of the Sino-US trade tensions, the economic cycle and geopolitics.