Important themes for the rest of 2019
Softening global macro data is a key theme at the moment. Whether you're looking at purchasing managers information or inverted yield curves. Now all that has implications for earnings expectations and therefore stock prices. At the same time with the softening macro data, we have the other key emerging theme, which is a change in the direction of travel for global policy making. We've entered an easing cycle in terms of monetary policy and at the same time, authorities are starting to re-examine pulling fiscal levers as well. That should underwrite growth as we move into the next few months and quarters and that should help business confidence and investment spending.
Which countries or sectors offer the best opportunities?
Asia, overall, is looking incredibly attractively valued and now. However, we will be particularly drawn to those countries that are exposed to trade – they're particularly cheap, today. And from a sector point of view, we would focus on the ones that benefit from the really powerful long-term secular dynamics in Asia, such as and expanding middle class, increased investment in infrastructure, urbanisation and technology and innovation. So that would lead us to sectors such as IT services, insurance, the broader technology sector, leisure and travel.
Are any geopolitical factors affecting your outlook?
The tariffs are clearly an unresolved issue, and I think we have to look beyond the impact of tariffs on headline growth rates to consider how this effects uncertainty, and uncertainty affects business confidence, which impacts investment decisions. However, the longer this goes on, the clearer it will become to everyone involved that there can be no winners in this and that will sow the seeds for a desire to seek resolution.
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