Equity markets suffer from high valuations and increased volatility that could limit yields to 6-7 percent this year, the Hong Kong Economic Journal reported Monday, citing Norman Boersma, president of Templeton Global Advisors Ltd.
The figure compares with up to 10 percent yield in the MSCI World Index in the past five years.
Boersma favors financial and medical stocks but energy counters are the ones to watch given their low valuation and a solid long-term outlook for the oil field services sector.
If China can sustain 6-7 percent economic growth, it will help ensure demand for crude oil.
Meanwhile, emerging markets seeking alternative fuels will benefit United States energy companies in shale gas exploration and production, he said.
Although banks are generally constrained by tighter regulations, those that have high lending capacity have room for growth.
In contrast, internet and technology plays have yet to return to normal valuations, adding downward pressure on the stocks, Boersma said.
Boersma raised his investment weighing on Europe to 50 percent, higher than the MSCI World Index, betting on five to six undervalued French stocks, including financial plays.
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