Societe Generale has raised China stocks to overweight, from underweight, and maintained similar ratings on Indian and Indonesian equities, saying all countries will benefit from the higher growth outlook in the U.S. under a Trump presidency. It, however, downgraded Taiwan and Korea to underweight because both countries could face the brunt of an expected rise in protectionism when President-elect Donald Trump takes over early next year.

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Reason behind Societe Generale’s upgrade of China’s stocks

The French bank’s upgrade of China in an Asia ex-Japan portfolio, came on expected better earnings, robust offshore flows, the onshore opening of Shenzhen Connect, and lesser sensitivity to the depreciation of the yuan. It also comes despite Trump’s pledge to bring back manufacturing jobs from China, and to act against the country he accuses of manipulating the currency, probably with higher tariffs.

“The higher growth outlook in the U.S. and the end-cycle delay favor global equities. This is especially true for developed market equities as the rising U.S. dollar, a more aggressive Fed hike cycle, and the threat of anti-trade policies pose bigger problems for emerging markets. In terms of style, we view the new growth outlook as a catalyst for value stocks, which still trade at a large discount to the broad market in spite of their recent outperformance.”

Societe Generale raised its S&P500 forecast to 2400, from 2200, over the next 12 months. The higher expectations come from an outlook for higher growth since Trump won the presidential race, end-cycle delays and projected moderate inflation.

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Ahead of the U.S. election, the bank had predicted a 8.5% drop to 1,950 if Trump won the election, and a 3.2% rise to 2200 in the event of Democrat Hillary Clinton’s victory.

Positive U.S. GDP growth forecast

The French bank’s economists have upped the U.S. GDP growth forecast by 1.1 percentage points to 2.1% in 2018, on account of a better economic outlook. It also raised inflation expectations by 0.5 percentage point to 2.6% and 2.7% for 2017 and 2018, respectively.

With a clear bias toward developed markets, amid expectations of a Fed rate hike and a stronger dollar, Societe Generale highlights a return to value across global equities.

“Value performance started to recover over the summer from low valuation levels. This outperformance has accelerated since 8 November as equity markets have been pricing higher growth, an environment generally benefiting value stocks.”

With a weakening yen, and a still weaker outlook for the Japanese currency, Societe Generale calls Japan a “land of value.”

“The Trump factor weakens the yen, fiscal tightening is ending, and the demand for equities, not least through the BoJ ETF purchase program is well supported,” it said. It expects Japan’s growth to be above potential as the effect of a 28 trillion yen fiscal package kicks in. But crucial to the gains is the value of the yen.

In India and Indonesia, the French bank is positive on reforms and improving fundamentals. The countries have been the two largest underperformers since the U.S. election on account of currency weaknesses.

Societe Generale kept its our underweight positions on Thailand, Malaysia and Singapore, and downgraded the Philippines to neutral.