BENGALURU (Reuters) - The global stock market rally has further to run in 2020, according to analysts, brokers and strategists polled by Reuters, but much depends on U.S. and Chinese officials making real progress in stopping a disruptive trade war.

FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., November 18, 2019. REUTERS/Brendan McDermid

A slim majority of respondents - 53 of 102 - said risks to their outlook were skewed more to the upside in the Nov. 11-26 poll. Just three months ago, a clear majority - 69 of 97 - said risks were more to the downside.

The turnaround in expectations coincides with a new buoyancy in most equity markets. Fears that the global economy might slip into recession, which the government bond market has been suggesting on and off in 2019 is an imminent risk in the United States, appear to have been alleviated in recent weeks.

“With a recession still an outside chance but growth remaining lackluster, we continue to prefer equities over fixed-income investments, especially at this late stage of the cycle,” noted analysts at Barclays.

“We expect returns to be limited considering stretched valuations, low growth and increasing uncertainties.”

A lot of recent optimism has stemmed from speculation U.S. and China trade officials are close to agreeing a way forward, despite the fact nothing substantial has been reported, let alone when or where leaders will next formally meet to discuss a resolution.

Indeed, 14 of 18 major indices polled by Reuters rose to their highs for the year in November. But two-thirds of analysts who answered an additional question - 76 of 114 - said the U.S. and China signing a partial deal would only help stocks rise marginally.

“Optimism about trade has been a factor behind the rally in global equities in the past month. But with a “mini-deal” now largely discounted in the markets, and economic growth unlikely to do better than stagnate over the next couple of years, any further upside for stock prices will be limited,” noted Simona Gambarini, market economist at Capital Economics.

(GRAPHIC: Global stock markets outlook - )

In the meantime, major central banks have cut interest rates and the European Central Bank has resumed its asset-purchase program, flooding capital markets with cash. But most developed and emerging economies are growing below potential and consumer price inflation remains quiescent for the most part.

Easy monetary policy has lifted most indices to double-digit gains this year, a feat less than a handful of the indices were expected to repeat in 2020. Only Mexico’s benchmark index, which has risen about 5% so far this year, was expected to better its 2019 performance next year.

A majority of the indices covered have either breached their end-2019 predictions from a Reuters poll taken a year ago or are within striking distance before the year ends.

But that strong performance seems to be coming to an end, according to the latest poll. Even the top performing indices for the year, which have risen 25% or more, including the S&P 500 .SPX, are expected rise less than 5% over the coming year.

Taken together with the sharp rise in investing in index-tracking funds over the past decade, the latest poll results suggest many investors should brace themselves for limited returns next year.

Among analysts who answered another additional question a strong minority of 45% - 50 of 112 analysts polled - said the bull run in global stocks would end within a year. About 10% said it had already ended. Over 40 respondents said within two years and 19 said more than two years.

While stocks in advanced economies have led the rally this year, they are now expected to take a back seat and make way for emerging markets, which are forecast to outperform over the next 12 months.

Only China, Brazil and Mexico’s benchmark indexes are expected to post double digit gains by end-2020. India’s BSE is forecast to rise around 7% for the same period.

“As headwinds from trade uncertainty and the slowdown of the Chinese economy may be fading, at least in the near-term, emerging markets equities could continue to be a main beneficiary of better investor sentiment,” noted analysts at UBS, who said they were closing an underweight position on emerging market stocks.