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Investment Monthly - August 2021

Exposure to the value factor, via Europe and ASEAN equities, makes sense. Valuations in some parts of EM fixed income, eg China, are attractive too.
02 August 2021
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    Key takeaways:

    • Relative valuations continue to favour equities over bonds, although the transition to the expansionary phase of the business cycle could impact performance despite scope for decent earnings growth
    • The risk of higher bond yields and cyclical uncertainties also weigh on the outlook for risk assets, while strong year-to-date returns combined with lower expected returns are reasons to be cautious for H2 and beyond
    • For us, exposure to the value factor continues to make sense, especially via Europe and ASEAN equities. Valuations in some parts of EM fixed income, especially in China local debt, look attractive too
    • Government bonds are struggling to act as a credible downside hedge. Investors will probably have to consider alternative hedges against developing macro risks