Play market rotations, with a focus on China
Uncertainty over growth, inflation and corporate earnings persists, even though there has been a mild improvement on the economic front. These trends underscore the need to be active and well diversified. In equities, investors should stay cautious and consider playing rotations favouring China but become more cautious on DM (US, Japan). European valuations also look attractive but we are defensive. In fixed income, US government bonds may help safeguard portfolios but corporate default outlook could deteriorate. This leads us to prefer high quality IG (over HY) and select EM names. Overall, we stay agile, defensive as some areas of the market could correct and present opportunities later.