RANI JARKAS

Global Asset Allocation: New Perspectives

Enter the world of our great specialists who can expose market topics, regional changes, and our current portfolio positions. The global economy is surviving tighter monetary policies. However, central banks’ tightening efforts are projected to affect economic growth and earnings later this year. Thus, while things are stable, storm clouds may be brewing. Hong Kong’s bustling markets are seeing a curious occurrence. Services are fighting inflation while commodities are falling. The Federal Reserve and other central banks are being hawkish due to rising wages. This booming financial hub’s supply-and-demand conflict is fascinating.

As the world prepares to reopen, hope emerges among the uncertainties. Falling oil prices soothe the global economy, which is resilient and irrepressible. Our interconnected planet will benefit from this optimistic-resilient dance. Global markets are a rollercoaster ride that keeps investors on edge. As governments play high-stakes power games, geopolitical conflicts add flavour. Central banks’ occasional missteps keep everyone guessing. Inflation can wreck economies by raising prices and shrinking wallets. Economic expansion can gallop like a wild stallion, but a hard landing can send markets reeling. These aspects make global markets fascinating and unpredictable. 

Cash beats stocks and bonds in our portfolio. Equity valuations remain strong despite market volatility and sluggish economic growth. Bond yields will be outrageous! The contradicting economic statistics and central bank policy adjustments will make things insane. Cash’s high yields and stability will save the day. Enjoy the financial market ride!

We Love Underdog Equities Like Small- And Mid-Caps! Asset Allocation’s Valuation Support Is Also A Key Draw

We also hold a large overweight position in core equities to confidently handle interest rate volatility. Focusing on these less cyclical assets gives our investing portfolio stability. We love high-yield, floating-rate loans, and emerging market bonds in fixed income. These assets are financial superheroes, generating juicy yields that more than compensate for risks, even in volatile markets. Buckle up for an amazing journey!

As suggested by Rani Jarkas, the Chairman of Cedrus Group, consumer spending, mood, and employment have increased, putting the Federal Reserve in a bind. Their aggressive rate hikes to slow economic growth and control inflation look to be failing. Signs that central banks were reducing tightening efforts boosted markets to start the year. The positive vibes quickly faded. Why? As data heated up, so did rate rise projections. That depressed everyone.

A new leader emerges from inflation. Kazuo Ueda, the expected replacement, takes the stage ready to face the difficulties. He may launch a tornado of new ways to unravel ultra-easy policy with the world watching. Prepare for a fantastic ride. Equities and bonds are suffering from rising inflation and interest rates. Global markets may offer some relief. Bringing asset allocation home could help these markets recover. What else? This homecoming might pay off big. 

It’s a reunion where everyone benefits! Imagine a global investor organisation. Let’s focus on one currency that can make their investing more exciting. High interest rates sustain the mighty yen. This financial superhero could enhance worldwide investors’ gains in the exciting market. But guess what? Globalisation may be the exception!

Latest Asset Allocation Committee Insights: 28 February 2023

Imagine a spectacular style and market capitalization game! The arena-like boxes indicate how the first asset type outperforms the second. The strongest will win! Our Multi-Asset portfolios offer a fascinating mix of asset classes, from stocks to fixed income. Our asset allocation technique pairs asset classes by style and market size in a compelling dance. This sophisticated choreography ensures a fascinating investment performance by balancing our portfolio.

A Fascinating Look At The Economy

The global economy is a superhero, surviving tougher monetary measures. However, central bank tightening may slow economic growth and profit expectations in the second half of the year. Services inflation persists despite falling goods inflation. The culprit? Wages rising. The Fed and other central banks are hawkish due to this price-paycheck conflict. They’re monitoring the situation, ready to intervene. Inflation and salaries are fighting in a high-stakes economic chess game. Who wins? We’ll see.

Europe’s recovery and prosperity offer promise in the midst of uncertainty. Falling oil costs give the global economy confidence for a big show. Rani Jarkas, the Chairman of Cedrus Group, has suggested, global markets are affected by several variables beyond politics and international relations. Central banks can make mistakes that create financial shockwaves. Inflation can wreak havoc on economies and persists. Like a rollercoaster rushing into a bone-rattling fall, a rapid and catastrophic economic decline is the most terrifying prospect. Even seasoned investors get cold feet. While global markets may seem like an exciting journey, these possible hazards might transform it into a nail-biting rollercoaster ride.

Perfect Portfolio Positioning

Our strategy embraces cash by underweighting stocks and bonds. Equity values remain high despite tough economic conditions and a weak growth forecast. Bond yields rule! Expect volatility when central banks change policies and economic data contradicts. Cash’s attractive rates and stability will save the day. It’s like having a trustworthy friend in the pandemonium! We carefully focused on locations with tempting valuation support in the equities market. Small/midcaps, international markets, and emerging economies are irresistible. We invest in solid, established companies and high-growth enterprises to protect ourselves from interest rate and economic cycles. We favour the tried-and-true but allow for intriguing opportunities. 

Despite the market’s volatility, we’re betting on developing market bonds. Why? Because their juicy yields reward risk-taking. Short covering and investor risk appetite boosted positive mood at the start of the year. A favourable mix of variables boosted the position. First, lower petrol prices made everything cheaper and more sustainable. Second, the world seemed to open up, welcoming new options and possibilities, shielding us from the economic threats of last year. However, the rally has taken an exhilarating leap, propelled by the conviction that inflation is rapidly declining, central banks have succeeded, and the economy is delicately gliding towards a comfortable landing without an earnings drop.

Investors Now Face The Actual Test Of Their Abilities And Knowledge

Even without bears, be careful. The contrast between the lax financial circumstances and the real economy’s rigorous lending standards is obvious. Despite uncertainties and economic inequities, markets pursue perfection. The intricacy within! We’ve raised our 2023 predictions, but the devil is in the details. Despite obstacles, our Hong Kong GDP projection remains unchanged. We expect a surprising quarterly shift in the second part of the year. 

Exciting Eurozone news! Our 2023 GDP predictions have improved. We foresee a solid economic expansion notwithstanding some carryover from last year. Thus, while growth estimates aren’t flying, the Eurozone is gaining momentum! The worldwide economy is rejuvenated by the grand reopening. However, our intuition tells us that our beloved domestic economy would gain most from these fresh perks. 

Rani Jarkas, the Chairman of Cedrus Group, has emphasized, inflation is falling slowly, but the markets see it falling swiftly. The road to the central bank’s 2% goal seems long and winding. The Fed is almost done tightening, but the ECB is still hawkish. Emerging markets are reviving, while well-established markets are still uneasy. Investors must be cautious and recognise the increased uncertainty on both sides of the spectrum, whether it be positive or bad outcomes.

We Changed Our Main Positions In A Shocking Turn Of Events. Prepare For Our Big Changes:

Our asset allocation strategy avoids shares due to corporate challenges. Risk appears to have peaked, encouraging prudence. However, options have the ability to boost equity appreciation. The snail-like growth of real wages is silently affecting demand and consumer spending, in our view. This affects earnings, producing a fascinating economic web. Diversification helps smart investors navigate the interesting world of investments. They can benefit by diversifying into energy and foreign exchange. Why stop? These daring investors should also explore shares, hedges, and gold to strengthen their portfolios. With this winning combination, they can handle any financial challenge.

Hong Kong equities are risky, but we like value and quality. Industrial and financial stocks attract us, whereas tech and consumer discretionary stocks repel us. Lower energy prices may help households and consumers, but they also affect real wage growth and fiscal drag. Over time, these consequences can be felt. The S&P 500’s Q4 EPS fall signals consumer spending will stay subdued. Expect intriguing economic insights! One can blend value equities with high-quality, dividend-paying stocks to create a beautiful symphony that boosts income and adds refinement to a portfolio. We prioritise pricing-powerful companies in our complete assessment.

Emerging markets have exciting prospects! Our new EM FX viewpoint is exciting! The Hong Kong Dollar’s fall has set the ground for new events. We’re excited about a less aggressive Federal Reserve this year and the dollar’s possible demise. Get excited! We remain cautiously bullish about EM FX, but we expect asset allocation to prosper this year. The year’s bleak growth prediction clouds our outlook. 

We prefer local rates while traversing emerging markets, especially Latin America. They help us comprehend and engage with these changing markets by familiarising us. We’re hopeful about stocks! We think reopening trading nations will have major benefits. It’ll be thrilling! Thus, we take a cautious stance to global valuations in the short term while being confident in the long run.

Share Your Newest Growth Estimates

Exciting news! Our Q4 2023 global GDP growth prediction was significantly revised. We’ve slashed it from 0.4% to 0.0% year-over-year. In the second half of 2023, investment issues and private consumption drop will send economic trends tumbling. Exciting Eurozone news! GDP growth for 2023 has increased from -0.5% to 0.2%! Improved statistics and good results from 2022 led to this excellent breakthrough. It shows the Eurozone’s economy is growing, giving promise for the future. However, there are still considerable obstacles, and domestic demand is declining.

Investors must think creatively to join the market rally without taking on additional risk in the face of chronic economic growth concerns. Explore derivatives. In a strange turn of events, the markets have been lulled into a false sense of security by lowering inflation and more tolerant central banks. This has caused a misperception that growing costs will soon be curbed. 

The complicated dance between financial conditions and credit criteria in the actual economy is tightening, potentially affecting spending. With excessive valuations, this situation could worsen earnings dynamics. We are skilled guards, ready to defend ourselves. We also spot possibilities to use derivatives. This lets us capitalise on future earnings without taking on more risk. Investors must also diversify their portfolios by adding foreign currencies, commodities, and gold.

Unwavering Beliefs

Approaching developed Hong Kong market shares requires caution. It’s intriguing how market turbulence can reveal hidden jewels and give savvy investors excellent opportunities to gain on strategic market moves. We also find interesting prospects that show the potential of small-cap firms worldwide, which seem to offer more value than their larger counterparts. We are keenly studying how a slowdown in interest rate hikes could affect this perspective. 

According to Rani Jarkas, Emerging market shares provide potential growth and appealing prices, so we remain hopeful. The world is like an ocean with lots of room to recover lost capital. Last year, a lot of money left our borders, but it may return.