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Δ Overweight ∇ Underweight — Neutral

Equity – at a glance    —

28 APRIL 2025

• We downgrade global equities to Neutral (core holding) and maintain a Neutral stance across all major regions. Policy uncertainty and a high level of volatility is resulting in a poor risk-reward. This is driving our preference to be Neutral, until the uncertainty subsides. US equities are under pressure as cracks emerge in the US exceptionalism narrative. Earnings are being revised down, but we still expect the market to recover under our economic soft-landing base case scenario as growth stays positive. The current earnings season is the main catalyst in the near term.
  
• Europe ex-UK equities are expected to benefit from fiscal support, although tariff-related headwinds could weigh on earnings growth. UK equities provide more defensive exposure, resulting in more resilience in a market downturn. However, a lack of growth sectors could constrain the potential of outperformance. Japan equities face challenges from a stronger JPY and persistent foreign capital outflows, despite Japan’s priority in engaging in trade negotiations with the US.
  
• Within the Asia ex-Japan region, we remain Overweight China equities. China’s earnings outlook is bolstered by the low-cost DeepSeek chatbot breakthrough. Also, policy stimulus supports a valuation re-rating, which should offset the geopolitical uncertainties and structural concerns. We remain Neutral India equities, which is relatively insulated from tariff concerns, but faces headwind from negative earnings revisions. On the other hand, we remain UnderweightASEAN, asthe redirection of China exports is intensifying competition for domestic ASEAN businesses and further weakening earnings momentum.
  

North America equities – Core holding     —

28 APRIL 2025

The Bullish Case:

+ Earnings growth

+ Supportive Fed policy

The Bearish Case:

– Valuations

– US trade policy uncertainty

Europe ex-UK equities – Core holding     —

28 APRIL 2025

The Bullish Case:

+ Inexpensive valuations

+ German fiscal spending

The Bearish Case:

– US trade policy risks

UK equities – Core holding     —

28 APRIL 2025

The Bullish Case:

+ Attractive valuations

+ dividend yield

The Bearish Case:

– Stagflation risks

– US trade policy risks

Japan Equities – Core holding     —

28 APRIL 2025

The Bullish Case:

+ Reasonable valuations

+ rising dividends/share buybacks

The Bearish Case:

– JPY strength

– US trade policy

Asia ex-Japan equities – Core holding     —

28 APRIL 2025

The Bullish Case:

+ Earnings

+ India growth

+ China policy support

The Bearish Case:

– China growth concerns

– US trade policy

Δ Overweight     ∇ Underweight    — Neutral

Bonds – at a glance     —

28 APRIL 2025

• We continue to view global bonds as a core holding. Uncertainty over US trade policy and, by extension, the growth and inflation outlook, have driven yield premia (the spread on higher yielding bonds over risk-free assets) higher. However, our core expectation for an economic soft landing, aided by Trump’s likely pivot to tax cuts and deregulation policies and monetary policy flexibility should help cap bond yields and support future bond returns. Additionally, we believe headline yields remain attractive, particularly compared to cash, helping to mitigate reinvestment risk when central banks [E1] cut rates further. Risks to our view include a reduced rate cut expectations and a surge in term premia in long-term bonds due to sticky inflation and rising government debt.
  
• We upgrade Developed Market (DM) Investment Grade (IG) government bonds to Overweight. Major central bank rate cuts should support performance. Additionally, we anticipate interest rate volatility to subside gradually as leveraged positions in the market are partially closed. We downgrade Emerging Market (EM) USD government bonds to Underweight and keep EM local currency (LC) government bonds a core holding (Neutral). Investors are demand high yield premia on bonds from major exporting countries, keeping yields elevated for EM bond asset classes. However, a weakened USD gives EM central banks greater monetary policy flexibility and supports EM LC bonds relative to their USD counterparts.
  
• DM IG corporate bonds remain a core holding (Neutral). While tight yield premia indicate rich valuations, we believe these are supported by solid fundamentals. We move DM High Yield (HY) corporate bonds to Neutral as demand for higher risk premia is balanced by low default expectations under an economic soft-landing scenario. Asia USD bonds are also core holdings (Neutral). Although most Asian economies face US tariff risks, stronger external balances, flexible monetary policy tools and robust domestic support are capping significant spikes in yields.
  

Developed Market Investment Grade government bonds – Less Preferred holding     Δ

28 APRIL 2025

The Bullish Case:

+ High credit quality

+ Attractive yields

The Bearish Case:

– High sensitivity to inflation

– Monetary policy

Developed Market Investment Grade corporate bonds – Core holding     —

28 APRIL 2025

The Bullish Case:

+ High credit quality

+ sensitive to falling yields

The Bearish Case:

– Elevated valuations

Developed Market High Yield corporate bonds – Preferred holding     —

28 APRIL 2025

+ Attractive yield, low rate sensitivity

The Bearish Case:

– Elevated valuations

– Sensitive to growth

Emerging Market USD government bonds – Core holding     ∇

28 APRIL 2025

The Bullish Case:

+ Attractive yield

+ Sensitive to US rates

The Bearish Case:

– EM credit quality

– US trade policy risks

Emerging Market Local currency government bonds – Core holding     —

28 APRIL 2025

+ Attractive yield

+ Benefit from USD weakness

The Bearish Case:

– US trade policy risks

Asia USD bonds – Core holding    —

28 APRIL 2025

The Bullish Case:

+ Moderate yield

+ Low volatility

The Bearish Case:

– Sensitive to China growth

Δ Overweight     ∇ Underweight    — Neutral

Commodities – at a glance

28 APRIL 2025

• We remain Overweight gold, raising our 3-month and 6-12-month targets to USD 3,400/oz and USD 3,500/oz, respectively. Gold remains a crucial portfolio diversifier, and there has been a surge in demand for gold-backed exchange-traded funds (ETFs) in recent weeks, particularly from Chinese investors. However, after the sharp rally in prices, positionings look stretched (Page 15); we would recommend waiting for a better entry level. Silver, which has lagged gold in recent weeks, can be considered, but silver is not a perfect substitute for gold, given its industrial demand. A credible resolution of US-led trade disputes is a key risk to gold prices, but we see any correction as an opportunity to add to exposure, as central bank demand remains a strong long-term anchor. The PBoC added to its gold reserves for a fifth straight month in March – a trend we see continuing, given China’s gold reserves at 6.5% of total holdings still lag the 15% average among BRICS peers. Rough estimations show that every 1ppt increase in China’s gold holdings as proportion of total reserves would amount to around 400 tonnes of new demand.
  
• We trim our WTI crude oil price expectations to 60/bbl over 3m and 12m horizons. The broader context of significant supply and subdued demand remains unchanged, as does our expectation oil markets remain in a surplus through 2025. US trade policy raises downside risks to economic growth, which in turn raises downside risks to oil demand. On the supply side, OPEC+’s decision to continue unwinding some of its prior supply cuts is likely to exacerbate excess supply. Geopolitics remains a key risk, with any flare-up in the Middle East posing an upside risk to oil prices. However, significant OPEC+ spare capacity means any price rebound is likely to be short-lived. Our view of subdued energy prices, though, are likely to help contain long term inflation expectations, particularly in the US.
  

Oil

28 March 2025

The Bullish Case:

+ Strong supply pipeline

+ Neutral level of investor positioning

The Bearish Case:

– Pace og global growth

Gold      Δ

28 APRIL 2025

The Bullish Case:

+ Portfolio hedge

+ Central bank demand

+ Falling real yields

The Bearish Case:

– Resilient USD

Δ Overweight     ∇ Underweight    — Neutral

Alternatives – at a glance     —

28 APRIL 2025

The Bullish Case:

+ Diversifier characteristics

The Bearish Case:

– Equity, corporate bond volatility

Δ Overweight     ∇ Underweight    — Neutral

Multi-Asset – at a glance

28 APRIL 2025