Credit Suisse "Stocks Promising in Second Half... Recommends Korea and Thailand in Asia"

[Photo by AP Yonhap News]

[Asia Economy Reporter Byunghee Park] Swiss investment bank Credit Suisse forecasted in its economic outlook report for the second half of the year that the global economic growth rate will reach 5.9% this year and 4.0% next year. It stated that the Korean and Thai markets are promising among Asian stock markets.

According to CNBC on the 24th (local time), Credit Suisse expects the global economic recovery in the second half of the year to accelerate due to vaccine distribution, fiscal policy, and the spread of service sector recovery. It added that corporate sales growth rates will increase and employment will rise again.

Credit Suisse predicted that the U.S. economy will achieve a growth rate of 6.9% this year. The Eurozone economic growth rate is expected to be 4.2%, and the economic growth rate of the Asian region excluding Japan is forecasted at 7.5%.

Ray Parris, Chief Economist for South Asia at Credit Suisse, explained in an interview with CNBC that stocks will record better returns than other assets until the end of this year, and that occasional corrections will be buying opportunities.

Credit Suisse recommended stocks in the UK, Germany, and Spain in Europe, and in Korea and Thailand in Asia. It analyzed that the Korean and Thai stock markets will benefit from semiconductor shortages and reflation trends. In the case of Thailand, it added that benefits from rising oil prices are also expected.

Reflation refers to a state where prices rise gradually after escaping deflation, which is a decline in prices. Currently, central banks in the U.S. and Europe are increasing the money supply to induce reflation. Although there are voices pointing out inflation, which is a sharp rise in prices, central banks in the U.S. and Europe maintain that the price surge is temporary and intend to keep their current monetary policies.

Parris predicted that the Fed will not reduce the scale of quantitative easing until 2022 and will not raise the benchmark interest rate until 2023. Therefore, he stated that such accommodative monetary policies will continue to support the value of risk assets.