Global Investment Strategy: Normalisation, not stagflation

We are very far from this. This year, growth should be around 6% in the US and 5% in Europe. It will still be above-trend in 2022.

We believe price pressures recede next year and central banks should look through current high inflation figures.

In short, we see this as a new stage in the recovery. Corporate profits and consumer savings are high. Governments are investing trillions in a green recovery. Central banks are only withdrawing support gradually.

So while we are closely monitoring risks from supply bottlenecks, tighter financial conditions and excess leverage in China, we see no major slowdown ahead.

We therefore maintain a constructive stance on risk assets.

We favour value and cyclical stocks, particularly in Europe, and companies focused on the net-zero transition. We have also increased our exposures to Chinese and Japanese stocks.

In fixed income, Chinese sovereign debt in renminbi, emerging market hard currency debt and select high-yield credit can all provide additional yield.

As growth concerns fade by year-end, we believe the dollar’s depreciation trend should resume.

With markets expected to remain volatile, we are positioning portfolios to weather short-term headwinds and seize opportunities for additional performance.

And of course, sustainability remains key to every investment consideration.

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