Strategist points investors to emerging economies

Global stock markets will continue climbing next year, albeit at a slower pace than during the bull market of 2009, while emerging market economies and European stock markets will be better investment destinations in early 2010, according to John Praveen, chief investment strategist at Prudential International Investment Advisers. 

Praveen gave out the advice during the Prudential Investors Forum 2010, held in southern Seoul yesterday, also predicting that central banks around the world would likely start lifting interest rates in the latter half of next year, though the move may come a little early in several countries including Korea, India and China. 

During yesterday’s conference, Praveen said he has a “positive view” on the global economic recovery, stressing emerging markets such as China, India and Korea would likely kick off a string of interest rate hikes in the first half of 2010.  

“Countries like the United States, Canada, Taiwan and Mexico will follow suit in the latter half of next year,” he said. European countries, the Middle East and African nations would enter the fray later in 2010, while Japan will be in no position to lift rates and start its exit strategy until 2011 begins, he said. 

Some investors and companies remain unconvinced about whether the current economic recovery will persist, and Praveen, too, expressed caution that the global stock markets may experience more turbulence next year than in 2009 because of lingering uncertainties over when each central bank will raise its interest rates. 

But that does not mean that investors should shy away from the stock markets next year, Praveen said. The strategist predicted that stocks in emerging economies would fare well in the first half of 2010 before tumbling in the latter half, while the U.S. Dow Jones industrial average would likely soar in earnest in the latter half of 2010 to reach above the 20,000-point level, from around 9,800 now. Praveen recommended investors expand their exposure to stock markets in emerging economies in the first half before picking up more U.S. shares in the latter half. 

According to Praveen, the Dow Jones is expected to climb above 10,000 by the end of this year before further climbing to 20,500 points sometime in 2010.