© Reuters. Man watches a board showing stock prices at a brokerage office in Beijing

(Reuters) – J.P. Morgan Asset Management has turned more constructive on prospects for global stock markets, saying it saw opportunities among cheaply valued mid-cap companies and financials following a year of weak returns.

“Many of our investors now see an above-average level of opportunity across areas of global stock markets,” Paul Quinsee, Global Head of Equities at the U.S. asset manager, said in an emailed note on Wednesday.

“Our Value team is seeing more constructive opportunities, including investing in financials and small caps; our emerging markets investors are expecting improved returns ahead … though much depends on China,” he added.

Quinsee said at current valuations, small caps looked more attractive than they had about three-quarters of the time over the past 28 years. He said many banks and insurance companies now looked interesting.

The more upbeat tone from one of the world’s top asset managers adds to signs that investors’ mood is improving even though expectations for corporate profits are still proving too optimistic and trade tensions continue to pose a risk.

Last week, Fidelity International’s multi-asset fund said it has moved to overweight on emerging-market equities and cut cash holdings to underweight.

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2019-01-23