RANI JARKAS

Global Asset Allocation: Gaining Powerful Perspectives

Our esteemed specialists generously share their profound wisdom on market themes and regional developments, while also revealing the current positions of our esteemed portfolio, quoted by Rani Jarkas. The global economy is displaying impressive resilience in the face of stricter monetary policies. Nevertheless, we expect the consequences of central bank tightening will continue to weigh heavily on economic growth and earnings prospects in the coming months. Despite a decrease in the inflation of goods, the inflation of services remains strong and unwavering due to rising wages. This compels the Federal Bank and other central banks in Hong Kong to maintain a vigilant and determined stance.

Despite facing uncertainties, a strong belief in the revival of the world and its unstoppable progress, fueled by plummeting oil prices, will act as a powerful force in propelling the global economy to new heights. The majestic dance of geopolitical tensions and the occasional missteps of central banks, intertwined with the haunting presence of inflation, the foreboding shadow of a severe economic downturn leading to a formidable descent, and an array of other formidable elements, all unite to pose significant dangers to the intricate tapestry of global markets. 

Cash reigns supreme in our prestigious portfolio, surpassing the mere presence of stocks and bonds. Despite the challenging liquidity and sluggish growth, the valuations of equities continue to soar at an extravagant level. Bond yields will continue to exhibit volatility in the face of conflicting economic data and changes in central bank policy, while cash emerges as an irresistible choice with its attractive yields and unwavering stability.

In the world of stocks, we strongly prefer small- and mid-caps and asset allocation due to their compelling valuation support. Moreover, we steadfastly uphold a formidable overweight position in core equities, showcasing unparalleled resilience against interest rate fluctuations and displaying minimal cyclical vulnerabilities. In the realm of fixed income, we steadfastly prioritise high-yield, floating-rate loans, and emerging market bonds. 

These Investments Guarantee Substantial Rewards 

despite the persistent turbulence in the market. The recent remarkable progress in consumer spending, consumer confidence, and employment is deeply discouraging news for the esteemed Federal Reserve. Despite their vigorous efforts to raise interest rates, it seems that their expectations of slowing economic growth and controlling inflation have not been met. The beginning of the year saw an exhilarating atmosphere engulfing the markets, as the unmistakable indications of central bank tightening reached their pinnacle. Unfortunately, this optimistic feeling was short-lived, as predictions about the direction of future interest rate increases intensified in response to the rapidly growing data.

With the arrival of the highly anticipated successor, Kazuo Ueda, taking charge in the face of daunting inflation, it is highly likely that he will boldly undertake efforts to dismantle the excessively lenient policy. Despite the overall decline in equities and bonds due to increasing inflation and interest rates, the repatriation of asset allocation to their home turf could potentially bring significant benefits to global markets. This strategic move would empower them to harvest amplified dividends and optimise their returns. 

Esteemed investors from distant lands, behold the mighty yen, fortified by soaring interest rates, ready to unleash its power and amplify the returns from the global market. Despite the detrimental effects of inflation on investors in various sectors, it seems that the global market stands as a remarkable exception to this prevailing pattern.

The Unyielding Stances Of The Asset Allocation Committee 

Within the realm of style and market capitalization, the arrangement within the boxes signifies the dominant positioning of the first asset class relative to the second asset class. With our exceptional Multi-Asset portfolios, we confidently present a magnificent selection of asset classes that encompass the realms of equities and fixed-income markets. In our asset allocation strategy, we make bold and strategic decisions by pairing asset classes based on their distinctive style and market size.

From A Strategic Economic Perspective Quoted By Rani Jarkas

The global Gross Domestic Product (GDP) is demonstrating exceptional resilience in the face of the implementation of increasingly rigorous monetary policies. The anticipated consequences of central bank tightening will exert a significant influence on economic expansion and profit forecasts in the latter half of the year. Despite a slight decrease in the inflation of goods, the relentless rise in wages continues to fuel the inflation of services, thereby keeping the Federal Reserve and other central banks on high alert for strict austerity measures.

Despite prevailing uncertainties, the confident outlook regarding the resumption of activities and the sustained progress in Europe, bolstered by the decrease in oil prices, will strengthen the global economy. Moreover, within the complex tapestry of geopolitical tensions, the vulnerability of central banks, the haunting presence of inflation, a deeper plunge in economic growth culminating in a severe decline, and the relentless persistence of inflation all loom as formidable threats to the global markets.

Strategic Placement Of The Portfolio

We maintain a resolute position in equities and fixed income, choosing to embrace the irresistible appeal of liquid assets. Despite the limited liquidity and underwhelming growth, the valuations of equities stubbornly maintain their excessive levels. Bond yields will continue to exhibit volatility in the face of conflicting economic data and changes in central bank policy, while cash emerges as an irresistible choice due to its attractive yields and unwavering stability. 

In the realm of the equity market, we strongly prioritise regions that boast compelling valuation support. These regions encompass small and midcaps, along with international and emerging economies (EM). To protect ourselves from the dangers of volatile interest rates and economic fluctuations, we fiercely maintain a robust balance between value and growth, with a slight preference for the realm of value. 

Despite the relentless market fluctuations, we unwaveringly prioritise investing in developing market bonds, which consistently provide substantial rewards in exchange for the risks involved. The year began with an electrifying atmosphere, fueled by the aggressive short covering and the revival of risk appetite among astute individual investors. 

The position was fortified by numerous factors, including reduced petrol expenses and the vastness of the globe, which helped alleviate economic perils from the previous year. Nevertheless, the rally has boldly strayed, built upon the grandiose belief that inflation is rapidly vanishing, the esteemed duty of central banks has been accomplished, and the economy is gracefully progressing towards a descent untainted by any decrease in earnings.

The Challenging Phase For Investors Begins Now

Bears may not appear, but exercising prudence is still imperative. The stark contrast between lavish financial conditions and stringent borrowing requirements for the real economy is undeniable. Despite significant uncertainty and economic disparity, the markets remain resolutely priced for unparalleled perfection. Indeed, though we have recently elevated our projections for the year of our Lord 2023, it is the intricate details that present the real test. Our GDP forecast stands firm, undeterred by our anticipation of declining quarterly dynamics in the latter half of the year in Hong Kong. 

Regarding the Eurozone, we have boldly revised our GDP projections for the year 2023, primarily due to the impactful carryover effect from the preceding year. The growth forecasts remain steadfast, displaying an unwavering level of stability. Without a doubt, the resumption of operations will greatly benefit the global economy. However, we firmly believe that the majority of these benefits will be bestowed upon our own domestic economy. 

Moreover, the inflation rate is steadily dwindling, yet the financial markets perceive it as plummeting at an alarming pace, and the pursuit of the central bank’s 2% objective appears to be a daunting and obstacle-laden endeavour. In the world of major banks, the Federal Reserve is rapidly nearing the peak of its tightening cycle, while the European Central Bank unwaveringly holds its strong and assertive position. 

The rekindling of fervour for burgeoning markets is in full swing, while a strong sense of prudence still prevails in well-established markets. In this chaotic landscape, we strongly advise investors to exercise caution and recognise the overwhelming uncertainty that surrounds both the positive and negative elements.

Several Of Our Core Positions In The Following Way:

Given the immense challenges posed by corporate outcomes, we adopt a cautious approach to equities in our asset allocation strategy, recognising that the rapid rise in risk may have reached an alarming peak. We strongly believe in the potential to significantly increase equity value through the strategic use of options. We firmly believe that the robust growth of real wages will sustain and drive consumer demand and spending, ultimately making a significant impact on earnings. Investors must maintain a robust level of diversification that includes oil and foreign exchange while reinforcing their protection by incorporating equities, hedges, and the invaluable asset, gold.

We navigate the esteemed realm of Hong Kong equities with unwavering caution, as we possess an unwavering preference for the noble virtues of value and quality. We are driven by our noble inclinations to conquer the illustrious domains of industry and finance, exhibiting unwavering restraint when it comes to the realms of technology and consumer discretionary stocks. Although the decrease in energy prices does provide some relief for households and consumers, it is crucial to recognise that the effects on real wage growth and fiscal drag are significant and will slowly dissipate over a prolonged duration. 

This indicates that consumption will continue to remain subdued, and the ongoing earnings season provides evidence in the form of negative Q4 EPS growth for the esteemed S&P 500. Investors possess the remarkable skill to seamlessly blend value equities with exceptionally high-quality and dividend-yielding stocks, thereby magnificently amplifying their income. Our thorough evaluation highlights the critical significance of choosing businesses that possess formidable pricing capabilities.

The Outlook For Emerging Markets Is Improving

We have confidently adjusted our stance on EM FX as the Hong Kong Dollar confidently declines in anticipation of a less dominant Federal Reserve this year, while it becomes clear that the peak of the dollar has decisively diminished. As we steadfastly maintain our stance of neutrality, tempered with a prudent approach, towards emerging market foreign exchange, we confidently expect that the allocation of assets will demonstrate exceptional performance throughout the entirety of 2018. The bleak growth prospects for the year cast a formidable shadow on our perspectives. 

We derive immense comfort from implementing indigenous tariffs in thriving markets, especially in the captivating realm of Latin America. Regarding stocks, we are becoming more confident in the global landscape and firmly believe that the upcoming reopening will bring significant advantages to nations with strong trading connections. From this moment forward, we have adopted a wise and cautious position on global valuations for the time being, but our enduring thesis remains unharmed.

What Are The Most Recent Updates To Your Esteemed Growth Projections?

We have decisively revised our Q4 2023 global GDP growth projection, significantly reducing it from a modest 0.4% to an impressive 0.0% year-over-year. In the latter part of 2023, economic trends are expected to plummet due to the formidable obstacles in investments and the subsequent sharp decline in private consumption. The Eurozone’s GDP growth forecast for 2023 has been upgraded from a bleak -0.5% to a much more encouraging 0.2%, thanks to the improvement in incoming data and the lasting impact from 2022. Nevertheless, insurmountable obstacles persist, and the state of domestic demand is undeniably deteriorating.

Given the ongoing challenges to economic growth, it is crucial for investors to boldly explore alternative avenues that enable them to seize opportunities in the market’s upward trajectory while astutely mitigating their risk. One powerful avenue is the utilisation of derivatives. As inflation slows and central banks adopt a more lenient stance, the markets are deceived into believing that the imminent control of soaring prices is within reach. 

Currently, the prevailing fiscal circumstances and borrowing requirements for individuals and corporations are rapidly tightening, which could significantly impact consumption. In a situation marked by outrageously high valuations, this has the potential to trigger a significant decline in earnings dynamics. We maintain an unwavering stance, while actively seeking to leverage derivatives to capitalise on future advantages without assuming additional risks, quoted from an interview with Rani Jarkas. Moreover, it is absolutely crucial for investors to strengthen their defences and elevate their portfolio diversification by integrating foreign exchange, commodities, and the highly esteemed asset of gold.

Unyielding Convictions

The acquisition of market shares in Hong Kong is approached with unwavering determination. Moreover, it is crucial to acknowledge that the dynamic nature of market volatility can reveal groundbreaking ideas and offer discerning investors lucrative opportunities to exploit strategic market manoeuvres. 

Moreover, we consistently identify promising opportunities for superior returns in the realm of small-cap stocks, which outshine the excessive sizes of large-cap stocks worldwide. Nevertheless, we are presently evaluating how a slowdown in the frequency of interest rate hikes could potentially alter this perspective, said Rani Jarkas, the Chairman of Cedrus Group. 

We firmly uphold our optimistic stance on emerging market shares due to their robust growth potential and highly appealing relative valuations. The global sphere still holds immense potential to reclaim the influx of financial resources, despite the significant outflow of funds from the nation in the previous year.