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| Yoo Jae-heung, fixed income senior portfolio manager at AllianceBernstein, speaks during a press conference in Seoul, Wednesday. Courtesy of AllianceBernstein |
By Lee Min-hyung
Investors are urged to bet on blue-chip U.S. stocks with solid fundamentals at this cycle of corporate earnings slowdown, global asset management firm AllianceBernstein said Wednesday.
"Even if the global stock market dispelled once-prevalent pessimism early this year by achieving a strong rally in the first half, investors should be reminded that the market is still surrounded by uncertainties represented by macroeconomic risks," Lee Jae-wook, senior portfolio manager at the firm, told reporters during a press conference.
To minimize risks and generate stable returns, the expert advised investors to build stock portfolios that are less vulnerable to macroeconomic circumstances and come with strong fundamentals.
"We maintain an optimistic outlook on the U.S. stock market in that such quality stocks with huge growth potential are listed mostly on the country's equity market," Lee said.
The remark reflects on the ongoing cycle of global monetary tightening, even if the U.S. Federal Reserve is widely forecast to end its rate hikes as early as this month.
Lee also underscored the importance of analyzing each separate stock in the area of semiconductors and secondary batteries.
"Chip and battery stocks are showing signs of recovery, but investors should not put blind optimism in them," he said. "Our suggestion is to analyze each stock in detail and figure out whether they can generate stable returns or what kind of profit models they have."
The company also said the future course of the overall asset market will be determined by price stabilization.
"The most important indicator that will affect not just bonds or stocks but all other financial assets is prices," Yoo Jae-heung, fixed income senior portfolio manager at AllianceBernstein, said. He pointed out that growth is slowing down, but central banks across the globe cannot take immediate steps for rate cuts due to slower-than-expected price stabilization.
"This is why most central banks will not drastically change their policy stance until the end of this year," he said. "The Fed is forecast to end its cycle of rate hikes by raising its key rate by 25 basis points again (during the July rate-setting meeting). A rate cut is expected sometime in the first half of 2024."
He did not forecast the global economy to face a serious recession, even if most countries display a slowdown in GDP growth.
"The pace of price stabilization appears slow, but we can expect a possible monetary policy shift next year when both GDP growth and inflation will slow down," he said.
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