This article originally appeared at elEconomista.es, an online Spanish business news website. Click here for the original version of this article, in Spanish.
JP Morgan recommends ‘overweight’ shares in your portfolio, especially if you are invested in the Japanese or American market. In the meantime, Europe offers some opportunities, but also needs to gain a competitive edge to be considered attractive from an investment point of view.
Stocks were the main theme for the last seminar held by JP Morgan Asset Management in Madrid, Spain. The reason seems simple: right now, the stock market is the market with the most potential. “We believe that shares will do better than bonds over the next six to twelve months,” said David Shairp, global markets strategist at JP Morgan Asset Management.
For Shairp, even the Japanese market, which has been so battered in recent weeks, offers value for investors since it “has never been as cheap as it is now.”
The European Problem
But the optimistic outlook on U.S. and Japanese stocks is different than the outlook for Europe, especially for the peripheral countries. So while the JP Morgan Asset Management team is also overweight in European stocks, they are only looking at countries in Central Europe and at Germany.
Ultimately, the big problem facing Europe right now is the sharp increase in labour costs, which, especially in the European peripheral countries, have increased between 15 and 30 per cent in the last decade. “They have to worry about how to improve their competitiveness and reduce labour costs, and not in the size of their bailout funds,” said Shairp.
For JP Morgan Asset Management, an improvement in competitiveness can come, at least in part, with a weakened euro. Ultimately, they see the dollar appreciating in the coming years against both the euro and the yen.
This article was written originally in Spanish by Ana Palomares and edited in English by José Luis de Haro.