Category: Multi-asset
Emerging-markets-lead-the-way
The global risk asset rally continued in early 2017, with emerging market investments the star performers.
Our medium-term framework for risk assets continues to point to a mildly cautious stance
Risks
- Increase in political risks across most Western countries: Europe’s turn in the spotlight
- Global debt burdens (and associated servicing costs) remain a concern in emerging markets
- Difficulties in normalising monetary policy could only become apparent as policymakers unwind emergency measures
- Shrinking valuation buffers in most risk assets (i.e. higher equity multiples, tighter credit spreads)
Opportunities
- Bouts of investor nervousness and volatility may present recurrent opportunities to add risk at attractive levels
- Potential US dollar strength as Fed hikes come back into focus
- Potential for higher inflation not yet reflected in index-linked markets
- Asset purchases by central banks (outside of the US) could keep asset prices supported