| Fullerton Investment Views 3Q19 – Highlights
US-China trade relations reignited downside risks for
markets and economic activity in Q2. Although tensions
seem to have defused again for now, the underlying
threat of renewed and unexpected twists in negotiations
suggest to us that risk premia in markets are likely to
remain elevated. On the other hand, it is important to
note that central banks have markedly shifted toward
monetary policy easing. This provides strong positive
offsets to the negative headwinds arising from trade
- Central banks have responded to a global
economic slowdown by accelerating a shift
towards monetary policy easing.
- Slowing global growth and prolonged
uncertainty over US-China relations
generate downside risks to an earnings
recovery in equity markets; overall equity
valuations are not overly compelling.
- On a more positive note, risk appetite and
positioning are not overly extended; flow
dynamics and positive risk seeking
sentiment could remain supportive for
markets in the near term.
- Risk premia in markets are likely to remain
elevated, given the uncertainty around
US-China trade relations.
- We remain engaged in risk assets, either
on a tactical basis or selectively in those
assets offering better value.
- Dovish central banks in Asia provide
support to bonds. We selectively prefer
duration exposure in markets with steep
curves and attractive real yields.
- We remain constructive within the credit
space, as spreads still offer attractive
value for credit and duration risk.
For a more in depth look at the market and risk asset fundamentals, read the full article here.