Global CIO Michael Strobaek: "Investors should not be too unsettled."
No news is not always good news. After four months of relative quiet on the US-China trade front, the USA recently took investors by surprise by unveiling higher tariffs on USD 200 billion worth of Chinese goods. In the latest Global CIO video, we look at how the latest trade twist could impact financial markets.
After four months of positive performance, global equity markets have recently moved lower as US-China trade tensions flared up, reducing investors’ risk appetite and increasing volatility. We believe that nervousness is likely to stay elevated until clarity emerges on the trade front, but we continue to believe that a deal – albeit with a delay – remains the most likely scenario.
On the right track
We are sticking with our view that equities will outperform – despite the uncertainty surrounding US-China trade relations. Global growth is on track, monetary policy remains loose and we are emerging from the meaningful slowdown in industrial production that began last year. We thus believe that equities is the best asset class to be invested in. In contrast, our conviction in emerging market (EM) currencies has weakened as a result of more expensive valuations and softer-than-expected improvement in economic activity outside China.
Value in long-term trends
In financial markets both volatile and calm, we believe a thematic investment approach like our Supertrends can deliver value. Categorizing large Supertrends into geopolitical, economic, or social developments helps to make sense of the world around us and offers a sound approach for long-term investing.