Executive summary
- Over the next 12 months, we expect the strongest returns from DM equities, and are positive on Asian equities and fixed income.
- In Asia, key regional economies can benefit from stronger DM demand. Rising earnings growth expectations, especially across South Korea, India, Taiwan, and Singapore, underpins our positive outlook.
- US GDP growth may be slowing and unemployment rising, but earnings growth expectations are still strong, underpinning our bullish view. Liquidity conditions remain supportive and Fed rate cuts could be an added tailwind.
- Japan equities should benefit from robust earnings growth, reflecting favourable productivity gains and competitiveness. Europe is lagging DM, but its earnings should gradually improve with stronger external demand and falling cost pressures.
- Despite longer-term ‘involution’ headwinds in China, positive investment opportunities can be found across value stocks, materials, and consumer discretionary.
- With the global economy expected to achieve a ‘soft-landing’, corporate credit investors, especially across DM, should enjoy reasonable returns. We remain positive on global sovereign bonds as real yields are attractive enough to generate favourable income streams, and this space can potentially hedge against unexpected growth slumps.
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