Asian shares, credit bonds to outperform in 2021: SC Bank

Asian stocks and credit bonds are forecast to remain bullish next year amid a recovering global economy due to the COVID-19 vaccine progress, according to a Standard Chartered Bank Korea report Monday. 

“Global economic activity, which has been halted by the COVID-19 pandemic, will normalize next year thanks to the vaccine distribution,” the bank‘s report said in regards to 2021 financial market prospects. 

“As the global economy is expected to rebound, risky assets like stocks are expected to climb higher. Especially Asian shares and credit bonds -- corporate bonds and emerging market bonds -- will outperform cashable assets or government securities,” it added.

The lender noted its most preferred investment outlet is Asian 
regions, followed by the US, Europe and Japan. As for the credit bond products, investing in Asian USD bonds, EM bonds denominated in US dollars and EM high yield bonds would bring higher returns amid the prolonged ultra-low rate environment, it said. 

In the wake of highly volatile financial markets, the bank stressed the importance of investing in different foreign currencies, including US dollars, the euro and Australian dollar. The euro and Australian dollar would continue to gain from the US dollar weakness, mainly triggered by the US government’s expansionary monetary policy stance, which could further exacerbate in the coming year, it added. 

The modest recovery of the global economy over recent vaccine development would offset investors’ concerns over the current overvalued stock market and price bubbles while pushing South Korean’s market attractiveness for foreign investors, according to the report. 

“South Korea’s exports showed signs of recovery in recent months. The country will see robust exports following the global economic rebound,” it said. 

Asia’s fourth largest country’s exports advanced 1.2 percent on-year in the first 20 days of December over strong sales of chips, according to the data from the Korea Customs Service.

By Choi Jae-hee (cjh@heraldcorp.com)