Yahoo Finance Top three investment opportunities for 2019
If stock markets in 2018 were defined by volatility, 2019 looks to be no different.
But according to AMP Capital’s chief economist Shane Oliver, it’s not all bad news.
He claims the worst of the falls should have already happened, and while global shares could still hit new lows in early 2019, we should then see a recovery.
In such an environment, there are pockets of opportunity – if you know where to look.
Here are three areas that seem set for a rebound that you could take advantage of to shore up your investment portfolio, according to Oliver.
1. Look for stocks with value
The recent market downturn has seen stocks become cheaper and their prospective returns increase.
“Look around for value in parts of the market that have been oversold,” Oliver said.
Stocks in cyclical sectors, such as autos or energy for example, have been hit hard on fears of recession.
But neither a global recession or a local recession seems likely, Oliver said, which will see cyclical stocks bounce back.
2. Look to emerging markets
Emerging markets saw “horrendous” falls last year that aren’t justified by the country’s economic outlook, Oliver said.
For instance, Chinese shares fell 30 per cent, but fears about a slowdown in China is overdone, he suggested.
“We will see a rebound in the emerging world as it becomes clear those countries won’t go into recession and that profits will keep rising,” he said.
“Obviously, I don’t know if we have hit a bottom yet, but it’s an environment where you can average into those sorts of markets.”
3. Look to commodities
Investors can expect prices of commodities to rebound in 2019.
Several commodity prices were hit hard in amid concerns about global growth, but again, these concerns have been somewhat overdone as global monetary conditions are still easing, the economist pointed out.
“We also haven’t seen the excesses that normally comes before a recession,” Oliver added.
“We should see solid growth in the global economy of around 3.5% in 2019, and commodity prices should rebound as that becomes clear.”
We’re already seeing this in oil prices to some degree, he noted.
“I don’t think oil prices are going to return to their recent highs, but I do think the lows were way overdone.”
Furthermore, given that most commodities are priced in US dollars, commodity prices will rise as the greenback stabilises.
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