Ben Powell, Chief APAC Investment Strategist BII said:

• “The BlackRock Investment Institute now sees trade and geopolitical frictions as the principal driver of the global economy and markets. We downgrade our global growth outlook and adopt a modestly more defensive investing stance.”
• “Central banks have turned decisively dovish to fend off a downturn, extending the long economic expansion and pushing down yields.  We upgrade EM debt because we see income as crucial in a low-yield world. The dovish central bank pivot also supports equities, but we are less positive on countries exposed to rising trade tensions or any lull in China’s growth, including broad Asian equities.”
• “The US has become an exporter of geopolitical and economic uncertainty, and has entered a more competitive phase with China. China has already used policy to mitigate some of the impact of trade disputes, and has room to do more fiscal stimulus. We think that Chinese growth will remain stable, albeit with downside risks from trade frictions.”
• “We see the gradual opening up of China’s capital markets presenting an historic opportunity for global investors to diversify their portfolios into a large and liquid market. Global investors can now access areas such as advertising, healthcare, and insurance that we believe have substantial room to grow in the medium term as well as tap China’s burgeoning bond markets for income.”

Read the report.

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