September 21, 2020

Equities: Positive Returns Ahead Despite Challenges

Equities: Positive Returns Ahead Despite Challenges

Focal Point
21/09/2020

Highlights:

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.

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FOCAL POINT: EQUITIES -POSITIVE RETURNS AHEAD DESPITE CHALLENGES

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