Global CIO Michael Strobaek: Trade tensions shouldn't derail growth
The heat has been rising in financial markets, and summer is not to blame. Growing trade tensions created another bumpy month.
The USA and China imposed previously announced tariffs on billions of dollars' worth of goods in early July, actions already priced in by the markets. But talk of further duties on Chinese goods caused another bout of risk aversion. We do not expect this tit-for-tat to end anytime soon, but our base case still does not foresee a full-fledged trade war.
Though the trade dispute is a risk we are factoring into our positioning, global growth is reaccelerating and industrial production remains above its long-term average. Given this favorable backdrop, we confirm our tactical positioning, including our positive stance on both equities and commodities. Within the latter, however, we turn neutral in our sector strategy.
Stage set for EM recovery
Though emerging markets (EMs) have been through a rough patch due to the trade tensions and the stronger USD, we are confident that EM assets will recover from their current oversold levels. After all, fiscal balances, sovereign debt and current accounts are healthy in many EM countries. We therefore maintain our positive view on EM equities, EM hard and local currency debt and most EM currencies.
Investing in tomorrow's technology
For a longer-term perspective, we look at our Supertrend "Technology at the service of humans" and the attractive potential we see in new technologies such as 5G networks and blockchain technology.