Executive Summary
Following an unparalleled 12 months, we enter 2021 with some light at the end of the tunnel. The arrival of vaccines will hopefully mean a swift reopening of economies, and a potential broad-based cyclical rally in risk assets. But the global economic rebound is unlikely to arrive prior to the second half of the year. Overall, we believe an end to the pandemic and ongoing policy support will contribute to a brighter future. Our 2021 Macroeconomic Outlook assesses what a post-coronavirus, ‘new-normal’ world will look like - and outlines the possible investment implications.
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Investment Outlook 2021 - A brighter future is possible
China
Normalising virus conditions, official policies and the natural economy will shape the 2021-2022 outlook
Asia
Asia will see a policy direction disparity as countries pursue different recovery paths
United States
Uncertainty will persist into 2021, over a winter virus outbreak, policy gridlock after the US election and the roll-out of a vaccine
Emerging Markets
Global trade recovery and vaccine to allow slow policy normalisation
Asian Rates & FX
Asian currencies’ strength may continue on the back of relatively higher rates and better recovery expectations
Asian Credits
Macro and valuation remain supportive for Asian fixed income, with greater credit differentiations expected in 2021
Asian Equities
Bright year to expect as the export-dependent region is set to benefit from global recovery of any degree while it levels up its game in free trade