Nowadays, the global economy is facing numerous threats that cannot be ignored. The US banking sector has experienced significant disruptions, while markets in Europe continue to grapple with rising inflation rates and the devastating effects of the ongoing Ukraine war.
Steven Rees, the Managing Director of Investments for the Middle East and North Africa at JP Morgan Private Bank, concurs with the market consensus that the US will likely face a recession in the next 6-12 months.
However, in a report sent to Asharq Al-Awsat, Rees expressed belief that diversified investment portfolios can continue to yield strong returns as the world approaches 2024.
Rees also pointed out that the worst of the stock market downturn has passed.
Regardless of the possibility of an economic recession, Rees ruled out the stock market dipping to the same levels it saw in October 2022.
According to Rees, expectations are based on several factors, including corporate profit growth, which plays a more significant role in stock market gains than many realize.
Although there’s been a slight decline in profits and their margins from their peak levels, and demand growth is slowing, corporate sales remain robust, revealed Rees.
Transportation and energy costs are low, and the dollar is weak, coupled with a less competitive job market environment, he further elaborated.
As a result, analysts’ projections for corporate earnings over the next 12 months have risen in the US, Europe, and China, Rees emphasized.
Moreover, Rees said that promising opportunities are present globally in various areas. These include investment strategies focused on companies with growth in dividend distributions, the shift towards clean energy, and the next wave of digital innovations.
Considering the diverse sectors, Rees added that healthcare and technology companies, particularly with many leading firms operating in the Middle East region, are favored.
Rees emphasized that the essence of investing revolves around constructing portfolios resilient to various types of risks in the long run.
He remarked that it might be premature to label the market as a new bull run, but added that he doesn’t believe it’s in a bearish phase either. Stocks have the potential for steady appreciation, while bonds can offer return stability.
Alternative investments also open the door to a plethora of investment opportunities, stressed Rees.
He further underscored that all these options have the capability to outperform cash in the long term, regardless of the occurrence of an economic recession.
