Asia's emerging stock markets are anticipated to be a better investment alternative next year because of inexpensive prices and economic recovery, while the US markets will face high volatility as a result of slow economic growth, say senior analysts.
Speaking at a forum hosted by SCB Chief Investment Office, analysts predicted Asian emerging markets, especially China and Vietnam, to have a brighter outlook for securities investment in 2023, compared with developed markets in which a mild recession could stunt economic activities.
The US economy is projected to grow only 0.4% next year, with the first two consecutive quarters posting negative growth, prompting the Federal Reserve to increase interest rates, said Charnwut Roongsangmanoon, assistant managing director at MFC Asset Management.
European economies have already shown signs of a slowdown, with the possibility of entering a mild recession in the second and third quarters of next year, he said.
The Japanese economy is forecast to expand only 1.4-1.5% in 2023, said Bodin Buddhain, director of the investment strategy division at Eastspring Investments.
"If China can't reopen its economy by mid-2023, the US economy could face a recession," said Mr Bodin.
"The situation could escalate if China delays until the end of next year."
Varorith Chirachon, executive director at SCB Asset Management, said with a slight decline projected for the US economy during the first half of 2023, "high volatility should be expected in the market".
Mr Charnwut cited China as the first market where investors should accumulate a position, followed by Vietnam, as value of stocks in both countries are attractive.
"China shows signs of recovery first because of the easing of zero-Covid measures and high savings among Chinese people, who are ready to spend once their country is reopened," he said.
"It is recommended to accumulate Chinese stocks from the first quarter. Vietnam, meanwhile, is also promising because it has good growth, although internal management remains a risk."
Stock prices in Vietnam have gone down by 30% since the beginning of the year because of an imposed limit on banks' liquidity, which is slated to be changed next year, according to Mr Varorith.
"Investors have better opportunities if they buy stocks when the market dips to the bottom," he said.
In addition, investment alternatives, such as global real estate investment trusts in the Asian market, have the potential to grow, offering investors a high dividend return and growth, said Mr Varorith.