Not all the world is in the same point in the business cycle, but some countries are certainly later-stage than others. Investors should assess how their holdings might perform in a downturn and look to actively select high-quality securities. A metric called the “financial cycle” can also provide a helpful way to measure an economy’s fundamental health.
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In a Q&A with Neil Dwane, Christiaan Tuntono says China will likely agree to reduce the trade deficit and support IP protections, but not roll back “Made in China 2025”. Mona Mahajan thinks an announced deal should boost US and Chinese stocks, but the markets have already priced in some of this news.
We think China will fix some trade-malpractice allegations to resolve its trade dispute with the US, but it’s unlikely to curb government subsidies or change its long-term strategy to transform its economy
In anticipation of a trade deal, investors should look at the “winners from trade” investment theme: technology, industrials and energy/materials seem likely to benefit from lower tariffs and enhanced global growth
Globally, we continue to favour a “barbell” approach in equities and fixed income across multiple regions, but we believe it’s critical to take an active approach to help manage risks
In this late-cycle environment, we believe investors should remain active, continue the “hunt for income” across asset classes and focus on ESG factors to seek additional downside protection