- Average returns of around 6% are projected for U.S. as well as Asian equities in 2020, says Credit Suisse chief investment officer Ray Farris.
- Credit Suisse and UBS Asset Management flagged three areas of investment opportunity for 2020.
In 2020, stocks won't see the returns investors enjoyed this year, according to Credit Suisse and UBS Asset Management.
But markets should still be resilient, Credit Suisse said. The investment bank's chief investment officer, Ray Farris, told CNBC on Monday that Credit Suisse projects average returns of 6% for U.S. and Asian equities, barring any developments that could affect the forecast — such as U.S.-China trade.
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In a briefing on Monday, UBS Asset Management predicted a shift to a "more active" fiscal policy — from the current predominantly monetary stance — from next year, which could potentially drive up yields.
Here are some sectors or investment picks they singled out for 2020.
Chinese property sector
Credit Suisse predicts that revenue and earnings in the Chinese property market will leap by 21% and 18%, respectively next year.
The bank said in a Monday briefing that Chinese authorities are likely to be more supportive of investment growth in the real estate sector next year.
"Valuations are at attractive levels. If policies are relaxed, valuations could mean-revert to their historical average, offering 20% upside," it said, adding that property stocks also pay high dividend yields of 6.3%.
In a research note on Monday, Japanese investment bank Nomura also pointed to positive signals from authorities on the Chinese property market that "could indicate loosening of property sector liquidity."
Sales of Chinese developers were already up in November by 24% year-on-year, according to a Nomura analysis of 17 companies.
Nomura's top stock picks with a "buy" rating include China Resources Land, Sunac and KWG — all listed in Hong Kong.
China's onshore bonds
China will "stand out" as a key bond market in 2020, says UBS Asset Management.
Chinese onshore bonds will benefit from central bank rate cuts in the first half of 2020, it predicted. Bond prices move opposite yields, which means as yields plummet, prices will rise.
Already, foreign money into the Chinese onshore bond market is on the rise. The amount of such bonds held by foreign investors have grown at an annual compounded rate of 30% per annum in the past five years, UBS Asset Management noted.
The flagship bond benchmark Bloomberg Barclays Global Aggregate Index started adding Chinese bonds in April this year — with the inclusion expected to take place over 20 months. Analysts estimated that the full inclusion will attract around $150 billion of foreign inflows into China's roughly $13 trillion bond market — the third-largest in the world after the U.S. and Japan.
J.P. Morgan has also said it will add Chinese government bonds to its Government Bond Index Emerging Markets from February 2020, which are also expected to attract billions to China's markets.
E-commerce, real estate
Online shopping will continue to gain traction in Asia, Credit Suisse said, pointing to how online retail sales in China have outperformed physical retail sales.
That, in turn, is set to boost industrial real estate assets, said the investment bank.
"Industrial assets should benefit ... as the e-commerce supply chain requires considerably more warehouse and logistics space," it said.