Michael Strobaek: "We are positive on equities"
In spite of market worries about international trade, the world economy remains on a solid expansionary course without overheating.
Financial Markets in Stormy Waters
Instead of entering calmer waters, financial markets have continued their bumpy ride in recent weeks. Trade tensions have lingered, and a correction in the technology sector has further dented market sentiment. While the trade dispute has unnerved investors, we argue that there are signs of progress and that a solution will be found through negotiations.
The Brighter Side
Despite the market concerns, we maintain that the global economy remains on a solid course of expansion. Inflation remains within the central banks' comfort zone, which supports more gradualism in normalizing monetary policy.
Given the continued economic expansion, we remain positive on equities. We still see most potential in emerging markets, but have turned neutral on euro zone equities as the strong EUR could impact corporate earnings.
Within our neutral view on fixed income, we have scaled back our optimistic stance on inflation-linked bonds, as breakeven rates are now at fair levels. Global real estate can continue to deliver positive returns, but not to the extent that would warrant a continued positive view. In currencies, our long JPY view remains a useful portfolio diversifier to our bullish stance on equities.
Infrastructure for Long-Term Investors
Beyond the short term, our Infrastructure Supertrend provides opportunities for long-term investors. The need for infrastructure investments globally is undisputed, with water & energy and transport two areas of priority.