Fullerton Investment Views 4Q 2019 

We have adopted a more positive view on risk assets, notwithstanding our caution over the successful execution of a US-China trade deal in the near term. Our positive stance stems from our expectation that global growth is likely to stabilise in the coming months, especially as both monetary and fiscal policies globally become much more accommodative. The impact of central bank easing is supportive not just for financial assets, but for real activity as well. Moreover, the market is lightly positioned and defensive; a normalisation of risk appetite would thus provide support for risk assets as investors reduce their underweight positioning.

Key Takeaways

  • We have adopted a more positive view on risk assets, notwithstanding our caution over the successful execution of a US-China trade deal in the near term.
  • We believe global growth is likely to stabilise in the coming months, especially as both monetary and fiscal policies globally become much more accommodative.
  • Equity markets with stronger earnings momentum and higher yielding fixed income assets are preferred.
  • Within the Equities space, we focus on markets and sectors where we expect more resilient earnings growth from a bottom up perspective.
  • Thematically, we expect the coming year to be an inflection point for 5G and have a structurally positive view on the Technology sector.
  • Given the strong performance of Asian credits year-to-date, the sector could take a breather into the year end, but supply dynamics remain favourable.
  • Asian high yield spreads are attractively above long-term averages and we see room for spread compression and outperformance in this space.

For a more in depth look at the market and risk asset fundamentals, read the full article here