Credit suisse predicts global growth of 5. 9% for 2021, says stocks to outperform other asset classes

A Thai investor checks an electronic board showing stock prices at Asia Plus Securities amid Coronavirus threats in Bangkok. Amphol Thongmueangluang | SOPA Images | LightRocket via Getty

Images Swiss investment bank Credit Suisse expects global growth to accelerate in the coming months as countries gradually reopen their economies, leading to a recovery in revenue growth and

rehiring. In its investment outlook for the second half of 2021, Credit Suisse predicted the world economy will grow 5.9% this year and 4% in 2022. That growth will be led by vaccine

rollouts, fiscal stimulus and a broadening services recovery. It also said the United States is set to grow at a rate of 6.9% this year, the Eurozone is expected to expand by 4.2% while Asia

ex-Japan is predicted to grow 7.5%. Economic expansion will likely lead to a sharp recovery in global earnings growth that is set to fuel the stock market, according to Ray Farris, chief

investment officer for South Asia at Credit Suisse. "We are looking for equities to be the asset class that is going to outperform over the next six months to a year," Farris told

CNBC's "Squawk Box Asia" on Thursday. "As long as earnings continue to trend higher, history suggests that equities will grind their way up." "There will be

corrections from time to time, but those corrections would really be opportunities," Farris said. EQUITIES TO OUTPERFORM In the equities market, Credit Suisse said it prefers exposure

to cyclical sectors such as financials and materials. Cyclical stocks are companies whose underlying businesses tend to follow the economic cycle of expansion and recession. The bank also

prefers cyclical markets in Europe such as the United Kingdom, Germany and Spain. Farris explained on CNBC that Europe as an equity market is going to produce about the same earnings growth

as the U.S. in 2021 but it is doing it at "valuations that are literally multi-decade lows on a relative basis." "You are getting Europe on sale as it comes out of the

pandemic, as it reopens and as growth accelerates," Farris said, adding that the U.K. has exposure to financials and the global economy while Germany has exposure to cyclical sectors.

In Asia, the bank's preferences are Korean and Thai stocks, which can potentially benefit from the worldwide chip shortage and global reflation trends. Thai stocks are likely to also

gain from a rally in oil prices. Credit Suisse is neutral on Chinese equities, citing a slowdown in growth momentum post normalization from the pandemic and regulatory risks that are

weighing on market sentiment. STOCK PICKS AND INVESTING TRENDS FROM CNBC PRO: * ‘Next dragon’: Fund manager names an under-the-radar, ‘very cheap’ market to play right now * Morgan

Stanley's Slimmon says the U.S. infrastructure sector is 'very powerful,' names stock pick MONETARY POLICY Farris pointed out in a separate media briefing that asset markets

and asset prices remain supported by monetary policy in the U.S., Europe, Japan and other countries. "Central banks, the core central banks, are likely to continue to expand their

balance sheets, injecting more liquidity into systems, all the way through to the end of the year," he said. Inflation pressure and inflation risks have risen in recent months,

according to the bank. It expects inflation to temporarily overshoot central bank targets in major economies as services sectors reopen. Persistent price pressures would encourage the U.S.

Federal Reserve to withdraw monetary accommodation — in the form of monthly asset purchases to stimulate the economy — early, Credit Suisse said. Farris said that he doesn't expect the

Fed to announce any decision until late third quarter and beyond, and that the actual tapering will not happen until 2022. Moreover, interest rates are likely to remain on hold until 2023.

"So, that's a very supportive monetary policy backdrop for risky assets," Farris said.