The tailwind from a benign global backdrop of low bond yields and market volatility, which has allowed endogenous factors to dominate country returns, cannot get much better. Volatility has been supressed but is not dead, and rates are likely to follow the uptrend in growth despite recently tamed market expectations. Interest rate-sensitive stocks have been given a reprieve but we are sellers into strength (particularly HK real estate). Our stock/country selection will be determined by politics and central bank action, underpinning the trade growth. We prefer cyclicals, value to growth stocks and politically leveraged (aspirational) sub-groups but hedge our bets with dividend growers.
Read more »