- Equity markets have rebounded from a historical slump in Q1, with US markets even posting fresh record highs.
- We acknowledge the risen risks of setbacks amid loftier valuations, elevated political risks (US elections, Brexit and US-China frictions) and Covid uncertainties into autumn.
- Overall, however, we see some further moderate upside. Higher valuations are compensated by recovering economic growth and corporate earnings amid strongly expanding monetary and fiscal policies.
- Central banks’ commitments to persistently low yields and continued asset purchases justify structurally higher market multiples. Investors’ positioning is still not stretched.
- We maintain a slight tilt towards cyclicals and EMs, which have been lagging the rally.