- The global sell-off in equity and bond markets so far this year has left investors with precious few places to hide.
- US investors have enjoyed a decade-plus of ample liquidity, low inflation, and low rates. It seems that the US is moving into a new phase of economic dynamics, which may reflect poorly on the US market over the next five years. As a result, investors have been looking at emerging markets (EM) and China more to meet future return objectives.
- We seem to be nearing short-term peaks in inflation, rates, US dollar strength, China internet regulations, downward earnings revisions, and more. As a result, investors are starting to position themselves for the recovery, especially in EM and China given low positioning, growth potential, innovation, and low valuations.
- As we potentially reach peak risk-off, we believe investors should position themselves for the recovery by adding growth exposure in emerging markets while valuations are depressed.
For further details see:
Are We Nearing Peak Volatility In EM And China?