Executive summary
- China is leading the global recovery, as our call of a painful but short global recession continues to play-out. Fullerton’s aggregate global growth indicator has returned to positive, and as it continues to gain strength it will become even more supportive of risk-assets.
- Recoveries in economic activity and unemployment, back to pre- COVID-19 levels, will be much slower. However, this shouldn’t be a headwind to global markets – what it will mean is that global central banks will keep interest rates very low for a prolonged period.
- With greater clarity that the end of the global recession is near, and as earnings growth expectations continue to improve, equities are performing very well. We now have a bullish view on global equities, and especially on China and Asian equities.
- Key risks remain a possible resurgence in COVID-19 lockdowns, greater geopolitical risks (including uncertainties surrounding the US elections), and valuations becoming too stretched and eventually leading to a risk-asset price bubble (that could painfully collapse).
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