By
Mayowa Adebajo
April 10th, 2024
JP Morgan strongly believes there will be a significant improvement in Asian stocks as next year starts. The growth of the region’s insurance sector is also expected.
Multinational banking and investment institution JP Morgan has expressed extreme confidence in the possibility that stocks in the Asian market will perform quite impressively as 2019 ends and 2020 begins. The company believes Asian equities are going to blossom, specifying that India and South Korea are fully set to take the lead.
Speaking to CNBC on Monday, JP Morgan’s head of Asia ex-Japan equity research James Sullivan, said the JP Morgan camp is “bullish on Asian equities”, suggesting considerable optimism in the company.
“We’re looking at an MSCI Asia ex-Japan index target of 750 at the end of first half (2020). Year end, however, we’re looking at 700.”
Sullivan also mentioned that the company’s index for 2020 which takes Asian stocks into consideration especially large and mid-cap stocks, will be as much as 8% higher than where it currently is, with significant improvements in India, China and Korea. He further added that one of the reasons for the optimism is the change in policy across the markets, which is expected to have a good enough ripple effect as 2020 approaches. He explains this saying:
“With aggressive policy easing this year, bottoming of the trade uncertainty-driven sentiment shock, and limited macro imbalances, growth looks set to bottom out in Q4 ‘19 and improve in 2020.”
Another factor to be considered according to Sullivan, is the rise in the worldwide tech industry with a lot of it happening in Asia. The exec believes there will be renewed investments in tech in the region, with equities in Korea and India, with significant benefits.
With all of this excitement and optimism, Sullivan has noted that there’s a chance the good fortune could change next year, as American elections in November inch closer, which could significantly affect policy. He believes that election season in the U.S. could considerably change things as “there’s not going to be a lot of policy impulse as we go to that period of time.”
The Indian government’s recent decision to reduce taxes paid by several companies and manufacturers as it looks to encourage growth in the economy has also been highlighted by Sullivan as a catalyst for the Indian stock market. The government cut down taxes by 8%, to 22% from 30% where it was before September.
For the Korean market, tech stocks are likely to go up because some of its biggest companies – such as Samsung – have been performing impressively, a performance that is very likely to bring increased demand.
Growth in Asia’s Insurance Sector
Away from the stock market, the next decade is expected to be “really attractive” for the growth of Asia’s insurance sector. In a conversation also with CNBC, JP Morgan Asset Management’s Alexander Treves said this, explaining that the insurance markets especially in India and Southeast Asia, can do with a lot more penetration.
Treves explained that growth in the economy will almost automatically cause a growth in insurance because people will be looking to do more as they get more comfy.
“As people get wealthier, they are going to spend more money on insuring, not just their goods and their livelihoods, but also of course their health and their lives,” explained he.