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June 2020

Global View Q3 2020 - Outlook

Economic activity should start to pick up over the coming months as lockdowns are gradually lifted. Yet the future remains highly uncertain and the recovery is likely to be uneven and bumpy. As the global economy starts to recover in the second half of 2020 and inflation expectations start to pick up from current depressed levels, we expect bond yields to move moderately higher with somewhat steeper curves. We similarly expect cyclical currencies to regain a relative edge against the dollar once lockdown measures are eased. Most emerging market economies enjoy strong external buffers and will avoid a systemic crisis, creating opportunities both for bond and equity investors. Equity markets have rallied on the back of a strong policy response by central banks and governments. Supported by plentiful liquidity but facing poor earnings outlook for 2020, equity markets are likely to oscillate in a broad trading range in Q2 and Q3. We focus on companies with steady cash flow growth, mainly found among IT and healthcare companies.

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