Around the world in 80 seconds

Karim Chedid
Karim Chedid, CAIA
EMEA ETF Investment & Product Strategy

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  • Hi everyone, welcome to Around the World in 80 Seconds. In this week’s video, I will focus on the Midyear Implementation Guide and the three themes we see driving markets in the second half of the year.

    Moving onto the second half of the year – three themes we see in focus. The first is the new nominal, and this keeps us focussed on rates remaining less sensitive to pickups in inflation – which ultimately means that real rates, especially in the US, remain negative, which is supportive for our pro-risk view. Within that, we’ve tactically upgraded European equities to overweight as we see the recent shift into the region, especially with European equity ETP inflows becoming more split across EMEA and US investors. We see this gathering pace. We downgrade US equities to neutral within that context of tactical equity view changes.

    Secondly, China stands out – and here we think now is the time for investors to consider China allocations as a standalone alongside EM [emerging market] allocations. We look at portfolio positioning across EM ex-China and China equities with a neutral view. We’re overweight Chinese bonds, where the carry trade from high-yielding bonds with good rating continuing to be important for fixed income investors.

    Thirdly, the shift to net zero and this is basically looking at portfolio implications from a very long-term theme that is here to stay. Within that on a sector level, tech stocks are well-positioned given their low emissions and they are also structural winners with accelerated penetration rates after the Covid crisis. We also look at sustainable exposures more broadly, which is a structural theme that especially in EMEA is getting more and more important. To finish with a statistic from EMEA flows, nearly half of inflows into the ETP industry across EMEA this year have been into sustainable exposures – so, a structural trend that is here to stay.

    Thank you for joining us and please read our Midyear Implementation Guide for more on our midyear views.

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