Fullerton Investment Views 2Q19 – Highlights

As we head into the second quarter, we expect stabilisation of global growth and policy easing to provide further support for asset markets in the coming quarter. Fullerton had been of the view that markets were overly pessimistic on the global growth outlook at the start of the year. Strong gains in risk assets and the evolution of data and policy developments have since validated our stance. From here, we expect that risk assets, especially Asian equities and credits, should be able to continue their outperformance. 

Executive Summary

• Risk assets, especially Asian equities and credits, are expected to continue their outperformance. 
• A continued de-escalation of US-China trade tensions, which remains our base case, will contribute towards a further reduction of market uncertainty and reduced risk premia. 
• Shift in central bank rhetoric, led primarily by the US Federal Reserve, has been one of the most important developments last quarter. 
• The move towards a more patient approach to rate hikes, and an earlier than expected end to quantitative tightening, neutralises central bank balance sheet contraction as one of the key headwinds for asset markets this year. The global liquidity cycle is thus turning more supportive for risk assets.
• Earnings revisions are likely to be more supportive for Asian equities. We remain focused on disciplined stock selection, with an emphasis on growth stocks.
• Asian credit metrics have improved – credit profiles are also in a good position to weather any potential disappointments in earnings. 

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