Market predictions for 2019 – looking into the sands of time!

 

 

Prediction is hard. Prediction is enticing.

To try and know the unknown is the greatest quest for mankind. And since the future is always unknown, it is a perfect challenge for us to try and predict it. People line up to have their palms read, or read tea leaves or smoke from a fire or anything that they believe can help them predict events in their lives. It gives us comfort.

 

 

Equity markets are no different.

A portfolio manager was asked “How do you know it is December?”

She replied, I see a new market prediction every day 🙂

So, let’s see what the talking heads predict for India and Indian markets for the next year.

But first, the million dollar question – Will there be a recession in 2019?

It is a valid question as global macro has seen increasing pressure and volatility.

 

Add to that, Deutsche bank notes that a record share of asset classes have posted negative total return this year.

 

But there is a silver lining.

LPL Research in their note says that Leading Economic Indicators are on a firm footing and it is highly unlikely we are going into a recession in 2019.

“Last, examining all seven recessions going back to early 1970 shows some interesting developments. It turns out the LEI turned negative year over year on average eight months (with a median of six months) before a recession officially occurred. That is what we call a nice track record. Again, with the LEI up 5.8% year over year, we believe we are a long way from this economic indicator flashing any major recession warning.”

 

Further most banks have a positive to neutral outlook for S&P 500, which usually augurs well for global equity markets as well.

Now, back to India.

The India “Bulls”

Morgan Stanley

Morgan Stanley is backing Emerging Market (EM) stocks for 2019. India is one of the countries within EM that they are Overweight.

 

Goldman Sachs Asset Management

James Ashley, head of international market strategy, said the valuations and growth outlook for Indian equities are attractive both short and long term.

“The key message for 2019 is we prefer equities to credit, we prefer credit to developed-market fixed income, and we prefer emerging markets to developed markets.

The environment over the next couple of years will be more challenging than it has been in the recent past — lower returns, higher risk — but that doesn’t mean it’s the time to go into cash.’’

 

The India “Blahs”

HSBC

 

JP Morgan

The India “Bears”

Hard to be a bear in the highest GDP growth country in the world. Even with the uncertainties of the election 🙂

By no means is this an exhaustive list. If you know of any market predictions for next year or have one yourself, let us know and we will add it to the list.

Where do we stand in all this? It is good data to have, but don’t read too much into individual predictions. Stick to your plan, become the best at your day job and let the market do what it does.

As they say, the final word on predictions is –

Some things are so unexpected that no one is prepared for them.

Leo Rosten

 

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