Invesco: Bullish on cyclical stocks and small-cap stocks, also bullish on developed markets (excluding the United States) and emerging market stocks

According to the latest information from the Smart Finance app, Kristina Hooper, Chief Global Market Strategist at JPMorgan, mentioned in the 2024 mid-year investment outlook that considering the favorable macro environment, JPMorgan tends to overweight risk assets but needs to maintain risk control because high valuations limit the upside potential of risk assets. In terms of stocks, she is optimistic about cyclical stocks and small-cap stocks because of their relatively attractive valuations and sensitivity to the economic cycle, as well as developed markets (excluding the United States) and emerging market stocks. Kristina Hooper stated that in the second half of 2024, inflation in most developed Western economies is expected to further slow down, and JPMorgan believes that the decline in inflation outside the United States will be greater. In terms of growth, the global economy remains relatively soft overall, but there are expected divergences in the performance of various economies. Kristina Hooper pointed out that in the later part of 2024, the market may make corresponding adjustments to changes in interest rate expectations. However, relative to the specific number of rate cuts, the view that the Federal Reserve will cut rates rather than raise them is more important, especially in a situation where market sentiment remains highly volatile. In terms of growth, overall, the global economy remains relatively soft, but JPMorgan expects divergent performances in various economies. For the United States, JPMorgan maintains its expectation of strong growth; for the Eurozone, JPMorgan expects relatively weak growth but the possibility of unexpected positive news; for Japan, a weak yen and structural reforms driving inflation back up allow the Bank of Japan to embark on a fairly mild tightening process; for China, consumer confidence is gradually recovering, reflecting an improvement in growth. Kristina Hooper mentioned that some markets seem to have already digested most of the positive sentiment. In fact, there are significant risks in some markets that are overly optimistic and have not fully digested potential issues. However, considering the favorable macro environment, JPMorgan tends to overweight risk assets but will strictly control risks because high valuations will suppress the upside potential of risk assets. In terms of bonds, especially long-term bonds, although yields are close to the highest levels in decades. Strong fundamentals support many fixed income assets, reflecting to some extent the significant narrowing of investment-grade and high-yield credit spreads. Through some credit risks, taking advantage of this resilient and improving growth environment. The diversification characteristics of bank loans are also attractive, as their duration is close to zero, and JPMorgan expects them to be relatively unaffected by interest rate fluctuations. Local currency and hard currency bonds in emerging markets are also expected to perform strongly. Furthermore, there are opportunities in the real estate market. Previous negative sentiment may already be reflected in prices, and with the improvement in the environment, the market is expected to rise significantly. For example, the downward adjustment of policy rates provides room for the decline in real estate debt costs and capitalization rates, which will boost trading activity and promote price recovery. Among the major currencies, as the Federal Reserve begins to cut rates, the US dollar is expected to weaken during the year, benefiting currencies such as the Euro, Pound, and Brazilian Real. On the economic front, Kristina Hooper stated that if the lagged effects of policy mistakes begin to show and prove to exceed the tolerance of the US economy, a "hard landing" may still occur In a "hard landing" scenario, it is advisable to favor assets such as cash, defensive stocks (such as consumer staples, healthcare, utilities), long-duration sovereign bonds, and currencies (Swiss Franc and Japanese Yen). In a "hard landing" scenario, the U.S. economy is currently in (or even exiting) the mid-term slowdown phase of the cycle and is expected to reaccelerate in the second half of 2024. Outside the U.S., surplus economies like the Eurozone and twin-deficit emerging markets are expected to benefit