HONG KONG, July 16 (Xinhua) -- Swiss bank Julius Baer & Co., which specializes in private banking, said Tuesday that it is bullish on American and Japanese stock markets but remains bearish on emerging market bonds.
"Money always goes in search of the highest return. It went to emerging markets over the past few years, because they had strong growth. But there will be a slowdown in capital inflows in the second half of the year due to the ongoing downward revision of growth expectations in most emerging economies," Mark Matthews, head of Research Asia for Bank Julius Baer & Co., told a press conference.
He likened global financial markets to beauty parades where popularity comes and goes. "Last year everyone wanted Chinese high- yield bonds, and snubbed Japanese stocks. This year it's the other way around."
As the U.S. economy firms and Japan's economy shows recovery signs, the Swiss bank suggested investors hold the two countries' equities rather than emerging market bonds, according to the bank' s 2013 mid-year global and regional economic outlook released on the press conference.
The bank bet on a stronger U.S. dollar in the second half, which will attract money from other currencies and lead to less liquidity in emerging markets.
The bank said there is growing evidence that the so called " Abenomics" is enabling significant and growth-boosting change in Japan. It forecast that the Japanese yen to fall to at least 105 per dollar this year, meaning that there is further upside for the Nikkei.
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