Key themes in global economy
• On a global scale, Russia-Ukraine war, China’s reopening, and recession fears in DMs remain key themes.
• Inflation has fallen sharply in most DMs, yet still remaining well above the central bank target levels. Even though Fed and ECB hiking cycles are nearing the end, the impact of higher rates is yet to be felt.
• Turbulence in US and European financial systems has likely faded. Despite the failures of some regional banks, diversified baking sector displays strong balance sheets.
• China’s reopening is driving the global GDP growth in 2023.
Key themes in global markets
• In equity markets, Europe and Asia-Pacific provide the most attractive valuations and, therefore, return potentials in short-term (tactical view). The US and emerging markets (EM) equities, on the other hand, seem to have better growth prospects over the longer-run (strategic view).
• In fixed income markets, government credits provide attractive yields in US, Europe, as well as EMs. In terms of corporate fixed income, bankruptcy risks reduce the attractiveness of credit. European corporate credit, however, has a positive short-term outlook.
