Emerging Asia Stocks Are Top '19 Pick in Citigroup Investor Poll

(Bloomberg) -- Emerging Asian stocks will be the best-performing asset class in 2019, according to institutional investors surveyed by Citigroup Inc.

Their preference, pipping U.S. equities as the most-favored market, makes sense if you anticipate a weaker dollar, strategists including Tobias Levkovich, said in a note to clients. Another sign of appetite for risk in the survey: cash as a share of assets under management is holding at 6 percent, about the same as over the past five quarters.

“Trade protectionism was the largest risk, but half of the respondents thought it would end up generating only limited impact, ” the strategists wrote. Still, “we saw the lowest inclination to commit new cash to equities in more than two years, with bonds getting a better bid,” they added.

Investors were almost evenly split on whether U.S. stocks will rally 20 percent or tumble 20 percent, the survey of 60 mutual fund, pension and hedge-fund clients showed. Fewer than 10 percent of respondents expect an American recession in 2019, though a majority sees one coming by 2020.

Developing Asian equities were picked by over a quarter of investors to outperform in 2019, according to the note. U.S. stocks came next, followed by Latin American shares, it said.

Health care stocks were the most preferred group on sectoral basis, followed by financials. Consumer discretionary and real estate shares were least liked, according to the survey.

To contact the reporter on this story: Cormac Mullen in Tokyo at cmullen9@bloomberg.net

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Ravil Shirodkar

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