Monetary easing and structural reforms in this region is expected to support the performance of Asian equity and bond markets in the next three to six months, according to Credit Suisse.

“We retain our regional preference for Asian equities and bonds, with a focus on markets that will benefit from monetary easing and structural reforms. Lower interest rates should support a growth recovery, reduce the cost of equities and improve risk sentiment,” it said in its March 2015 report on private banking and wealth management strategies in Asia-Pacific.

Credit Suisse said it maintains its “outperform” equity view on Japan, Australia, China and India, as central bank stimulus is expected to support the recovery and corporate earnings outlook.

“Despite tentative bottoming signs of the oil market and medium-term stimulus from weaker commodity prices, Asian central banks are expected to take further easing actions due to unabated disinflationary pressures and short-term growth risks, thus providing a key policy driver for Asian equities and bonds in the first half of 2015.”

On China, Credit Suisse said recent data suggested that the economy still faces downside risks in the short run. “With inflationary pressures well contained, we expect more monetary easing over the coming months.”

The investment house said it has turned negative on the yuan and Singapore dollar against the US dollar due to a worsened cycle view following the shift of central bank policy to an easing bias.

Among Asian currency bonds, Credit Suisse favours rupee, rupiah and baht bonds for their “attractive valuation and monetary policy support”.

For “top investment ideas”, Credit Suisse advised investors to go for high-yield and emerging market bonds.

“We advise investors to broaden the search for yield to high-yield bonds and emerging market (EM) hard currency and local currency credits that offer a sufficient credit spread buffer to absorb benchmark yield increases.

“The strength of the US recovery and early bottoming signs of oil prices support the performance of high-yield corporate bonds, particularly in the US.

“With regard to EM debt, Asian hard currency and local currency bonds are benefiting from falling inflation, intensifying monetary easing and structural reform progress.”

Credit Suisse also advised investors to adopt a “dividend stock” strategy under the present circumstances. “In a persistently low-yield environment, Asian dividend stocks offer investors an attractive alternative source of yield and a defensive vehicle to capture upside in equity markets with lower volatility.”

However, the investment house takes a more cautious view on US equities. “Geopolitics, softer US earnings, as well as volatility due to an expected Fed hike, support a ‘neutral’ equity view. We expect US equities to underperform, and prefer European and Japanese equities.”

On the foreign exchange market, Credit Suisse said it believes the recent US dollar consolidation is likely to be temporary. “In view of continued US versus eurozone policy divergence, we continue to favour the US dollar over the euro. Cyclical risks have increased for the yuan and rouble. We stay cautious on emerging market currencies in general.”