Value Partners Multi-asset Outlook: Asian markets well positioned gold will be favored by funds

2022-06-18 0 By

Kilter finance APP that, recently, ‘a senior fund manager Zhong Huixin report, released in the conflict between Russia and Ukraine under the background that led to increasing concern about the global market, think of China and some Asian countries inflation is more controlled, in terms of investment in a more advantageous position, and the outlook for multiple assets is given.First, in terms of stock, for A shares and Hong Kong, Russia and Ukraine tensions rising weaken investment sentiment, A series of sanctions on Russia and geopolitical conflict cause commodity prices have soared, such as oil, metals and agricultural products, such as high inflation, investors worry will further slow down global economic growth, the market panic selling.Given the heightened volatility, investors will remain cautious in the near term.On the other hand, China’s aggressive growth targets for this year suggest that more growth-stimulating policies are needed.Current valuations are attractive to investors looking beyond current volatility.On the A stock market, inflation concerns began to hit investment sentiment in the onshore market as commodity prices soared.China, however, is better equipped than western countries to deal with the commodities crisis.The market expects more fiscal and monetary easing policies to support the economy after the two sessions, and the supported sectors in the A-share market, such as infrastructure, urbanization and renewable energy, are likely to be direct beneficiaries.In Asia ex-Japan stocks, investors turned to safety as the dollar continued to strengthen.In the current investment climate, it is particularly bad for commodity importers and regions with high valuations, such as India.Indonesia, Asia’s largest exporter of commodities, will benefit from a cycle of rising commodity prices.The outlook for corporate earnings remains murky given the many uncertainties that remain in the market.In Japan, a rise in confirmed cases caused by the Omicron variant of the novel coronavirus weighed on economic growth as consumer sentiment weakened, the report said.In addition, global risk aversion is on the rise and foreign investors will once again sell Japanese equities.For emerging market (ex-Asia) stocks, there are worries about war in Eastern Europe, and money continues to flow into Latin America as commodity prices rise and money prefers commodity-rich countries.Western countries plan to buy and stock more goods from Latin America.However, volatility in emerging markets will continue to increase, given cautious investment sentiment and a stronger dollar.Second, on the bond side, for Asian investment grade debt, credit spreads continue to widen as market volatility rises and there is a risk of “falling angels” at some companies given the gloomy economic outlook.Even if the Fed’s first rate hike in March was not too aggressive, the path of the rate hike cycle and quantitative tightening remains highly uncertain given persistent and rising inflation concerns.In Asian high-yield debt, some Chinese property developers suffered credit ratings downgrades and an inability to refinance in the near term, further weakening domestic property bonds.Investors need to identify bonds with strong balance sheets from different asset classes.Bonds issued by individual fundamentally strong companies are at attractive levels.And emerging market bonds, as Latin American markets are benefiting from high commodity prices, money continues to flow into the region, with credit default swap pricing in Brazil, for example, continuing to fall.Weak sentiment and volatile performance of emerging market currencies will keep investors cautious.For gold, investors bought the metal as a hedge against geopolitical risks as tensions between Russia and Ukraine increased uncertainty.With Russia’s expulsion from SWIFT adding to market volatility, gold will be even more of a money bet.Finally, from the perspective of multi-asset, the volatility of multi-asset strategy is lower than that of traditional single asset or balanced portfolio.However, the correlation of risky assets such as equities, bonds and commodities has increased sharply recently.Under the uncertain low return investment environment, seeking stable return becomes an important source of return for investors.