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JP Morgan sees solid potential for US, Asian stock rise

JP Morgan said US stocks could rise 20% and most Asian stock markets could gain 25% by the end of 2009 amid growing signs the global recession may be nearing an end.

“The global recession is almost over. June would mark an end of the US recession,” Jan Loeys, head of global asset allocation, told reporters at an event in Taipei on Wednesday.

“I know at this point money is flowing to risky assets. Momentum is significantly going to recovery types of trade,” such as stocks, Loeys said.

Foreign investors, after a six-month drought, have been sending billions of dollars back to Asia, a trend some expect to continue on hopes China will lead the region out of the global recession.

“Our confidence in China's market is getting stronger and stronger. China's domestic consumption has been picking up since March,” said Frank Gong, chief China strategist of the US firm.

“Chinese consumers dared to buy properties and cars when people in other countries were tightening their spending amid the global economic slowdown,” Gong said.

“If China's GDP growth hits 10% in Q2 and in Q3, as investors are expecting, its stock market should be okay.”

Taiwan stocks, among the world's top performing markets along with China so far this year, received an upgrade from JP Morgan, which predicted the main index will finish this year at 8,000 points, up from 6,000 previously forecast, partly due to improving ties between Taiwan and China.

JP Morgan had overweight ratings on shares of Chinatrust Financial, Yuanta Financial and technology shares like Acer, TSMC, smartphone maker HTC and Mediatek. (Reuters)