HNWIs are largely optimistic in their 2019 investments, but private banks differ on where growth will come from, according to two separate studies from major private banks.

59% of European ultra high net worth individuals (UHNWIs) are optimistic about stock market valuations says J.P. Morgan Private Bank. Their Private Client Survey has shown that wealthy individuals believe the current market conditions show room for growth.

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However, there are still 41% of clients who believe that current valuations indicate the stock market is already in bubble territory and this only means a downturn.

Trade war overblown says Lloyds

Trade tariffs between the US and China have affected European UHNWIs. Half of the respondents to J.P. Morgan Private Bank’s survey said they believe a global trade war is the greatest risk for emerging markets and 18% of investors are concerned about China’s economic slowdown.

Oliver Gregson, head of the UK and Ireland markets for J.P. Morgan Private Bank said: “Frome trade tariffs and higher interest rates to populist politics, there has been no shortage of uncertainty in 2018. Escalating trade tensions remain the biggest risk to our view and of most concern amongst our clients with such a descent into a full-blown trade war likely to be negative for stocks worldwide.”

Another study by Lloyds Private Bank believes this is overblown. Their Investment Outlook 2019 report suggests that China could present the biggest opportunity for growing investments in 2019.

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Markus Stadlmann, chief investment officer at Lloyds Private Bank, says:
“The brouhaha over a US-China ‘trade war’ has certainly dented investors’ confidence. However, our analysis suggests that this will have minimal influence on the global economy. In fact we see China as a good opportunity for investors in 2019.”

Late-cycle opportunities for 2019 investments

There are still clients who see late-cycle opportunities according to J.P. Morgan Private Bank. Their survey found that 38% of UHNWIs continue to believe equities will be the best performing asset class over the next 12 months, followed by 34% who believe alternatives will be.

Again, this is countered by Lloyds Private Bank which is “very pessimistic” about US equities. However, both private banks agree that another recession is a long way off yet.

“Warnings of recession abound. Our analysis suggests a global recession isn’t likely and equity markets are ready for another step up,” says Stadlmann

Gregson adds: “We believe we are closer to the end of the cycle than the beginning. However, late-cycle does not mean the end of the cycle. As market conditions are likely to become more volatile long-term investors should stay patient and maintain diversification in their portfolios.”