HSBC Private Bank chief investment strategist Jose Rasco recently discussed his views on the market with Sara Silverstein of Business Insider. His outlook on U.S. equities was positive, but he believes that investment in Asia is most likely to yield results this year.
The U.S. is certainly strong, he said. “We think that given the strength in earnings and the strength in GDP and the stability of inflation, and the Fed moving slowly, we think that the US is a good place to be,” he explained, “but if you want to invest in an area where you’re going to see growth, and that’s one of the reasons to invest in equities right, is we want to be in Asia. We see growth there in excess of 6% in China, 6.5-7% in China, in excess of 7% in India, positive demographics in India, and a great deal of spending on an infrastructure and technology so those are very positive drivers for us.”
Rasco indicated that infrastructure is particularly promising, especially in China. He explained that as countries throughout Asia become more digital, more opportunities arise to create jobs and meet new market demand. “In addition, you’re seeing in China the same thing,” he said, “a great deal of spending on infrastructure, the One Belt One Road for example, which is a massive infrastructure project — trillions of dollars a year for the next ten years, and they are building roads, essentially think of Marco Polo on a bullet train, and that’s what we’re seeing. We’re seeing the time of goods to market is being reduced dramatically by this project. Think of years ago, if you had been alive when the Chinese were building the Great Wall, would you not want to invest in the timber and cement companies that were making it? That’s what we’re in the middle of right now. So we like China for that infrastructure, because don’t forget when you invest in infrastructure, you create jobs, wealth, and you keep inflation under control.”