The return of the interest rate hike cycle in the United States and the prolonged contraction in manufacturing activities in China as reflected by the decline in the Producer Price Index for 40 consecutive months are some of the factors that will continue to swing the stock market, said Edmund Yun, BMO Private Bank managing director for investment in Asia.
Yun said oil production will fall given the continued plunge in crude prices since last year while the depreciation of the renminbi exchange rate is leading global financial markets into a turbulent era, the Hong Kong Economic Journal reported on Thursday.
The oil price may return to US$45 to US$50 a barrel in the second half of this year, he said.
G20 finance ministers, who will meet in Shanghai at the end of the month, are expected to discuss how to stabilize foreign exchange rates and the global economy.
Yun said China’s middle class is estimated to swell to 500 million to 600 million in the next 10 years.
As such, investors should target shares of companies engaged in consumption-related businesses, he said.
Overseas-listed theme parks and food and beverage chains may also see rapid growth, Yun added.
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