Standard Chartered Money Insights

The market narrative is shifting towards questions about ‘too much’ stimulus and a risk of inflation. We see this environment supportive of a broadening equity market rally, albeit with significant rotations across sectors, regions and themes. In equities, we see room for our rotation-to-Value theme, 'Ready, Steady, Rotate', to extend. We add the UK to our regional preferences alongside the US, Japan and Asia ex-Japan. Rising bond yields are a challenge for multi-asset income strategies as the journey to higher yields runs through initially lower bond prices. However, we see this as a temporary challenge.

Speakers:

• Steve Brice, Chief Investment Officer, Standard Chartered Bank
• Sean Pang, Investment Strategist, Standard Chartered Bank

The message from the Fed’s latest policy meeting was unmistakable – the US central bank wants to run the economy hot for quite some time and will only tighten policy if actual inflation (not expectations) significantly and sustainably rises above its modest expectations. This is likely to add an element of volatility into the bond markets, as investors parse every bit of inflation data in the coming months. 

Nevertheless, we believe the environment of accelerating growth and extremely dovish central banks (the ECB announced a faster pace of bond buying only last week) is bullish for risk assets, especially US and Asian equities and higher yielding corporate and Emerging Market bonds and currencies. 

Speakers:

• Marco Iachini, Cross-Asset Strategist, Standard Chartered Bank
• DJ Cheong, Investment Strategist, Standard Chartered Bank

President Biden’s just-approved USD 1.9tn fiscal stimulus is likely to turbo-charge growth, setting the stage for positive corporate earnings surprises, especially in old-economy sectors. Meanwhile, central banks are likely to restrain bond yields. We believe this backdrop sets the stage for further rotation from Growth to the relatively inexpensive Value equity sectors in the coming months. 

Speakers:

• Fook Hien Yap, Senior Investment Strategist, Standard Chartered Bank
• Abhilash Narayan, Senior Investment Strategist, Standard Chartered Bank

The latest bubble warning from China’s regulator coincided with a renewed rise in bond yields, dragging stocks lower. Since it is hard to pin-point or time bubbles, a prudent course, in our view, would be to rebalance investment allocations: for instance, from last year’s winners such as Growth equities to relatively inexpensive Value stocks.

Speakers:

• Abhilash Narayan, Senior Investment Strategist, Standard Chartered Bank
• Marco Iachini, Cross-Asset Strategist, Standard Chartered Bank

Our preference for equities remains unchanged given the improving growth and earnings outlook. However, it is prudent to review portfolios to ensure they have not strayed significantly from your risk tolerance and rebalance, if necessary. 

Speakers:

• Steve Brice, Chief Investment Officer, Standard Chartered Bank  
• Marco Iachini, Cross-Asset Strategist, Standard Chartered Bank

Rising global growth and inflation expectations have paradoxically raised some alarm bells. Will the resulting rise in bond yields force the Fed to tighten monetary policy, impacting risk assets?  We do not expect the Fed to tighten policy anytime soon, given still-weak job markets. Nevertheless, there is a chance of short-term pullbacks after a rapid rise in yields, which we would use to average into our preferred asset classes and themes.

Speakers:

• Manpreet Gill, Head of Fixed Income, Currency and Commodities (FICC) Investment Strategy, Standard Chartered Bank
• Abhilash Narayan, Senior Investment Strategist, Standard Chartered Bank

After a disruptive year of the Rat, the year of the Ox brings hope. The Ox also symbolises hard work. We acknowledge that this year will be a hard grind for economies to recover from a recession and for businesses to return to earnings growth to justify elevated valuations. We remain hopeful that both will surprise positively, benefitting risk assets.

Speakers:

• Audrey Goh, Senior Cross-Asset Strategist, Standard Chartered Bank
• Fook Hien Yap, Senior Investment Strategist, Standard Chartered Bank

Risk assets, especially Emerging Market equities and global high yield bonds, remain overbought. Nevertheless, improving fundamentals suggest it would be prudent to stay invested in a diversified allocation, instead of reducing exposure, and average in on any short-term market pullback.

Speakers:

• Marco Iachini, Cross-Asset Strategist, Standard Chartered Bank
• Manpreet Gill, Head of Fixed Income, Currency and Commodities (FICC) Investment Strategy, Standard Chartered Bank

Equities have had a very strong start to 2021. Some short-term equity market indicators look stretched, which risks some temporary weakness, but we would be comfortable buying the dip with a 6-12 month horizon. We continue to prefer equities, corporate and EM bonds and multi-asset income strategies and believe drivers of our 2021 investment themes remain in place. 

Speakers:

• Audrey Goh, Senior Cross-Asset Strategist, Standard Chartered Bank
• Fook Hien Yap, Senior Investment Strategist, Standard Chartered Bank

US President Joe Biden’s ambitious agenda in his first 100 days should be significantly positive for reflating the US and global economy. This is likely to be supportive of global risk assets, especially in Emerging Markets, any short-term pullbacks notwithstanding.

Speakers:

• Abhilash Narayan, Senior Investment Strategist, Standard Chartered Bank
• Manish Jaradi, Senior Investment Strategist, Standard Chartered Bank