Now’s the time to plan your legacy

Δ Overweight ∇ Underweight — Neutral

Equity – at a glance    Δ

20 JUNE 2025

• We remain Overweight global equities amid resilient fundamentals. The de-escalation of trade tensions continues and earnings growth is healthy, while inflation has remained under control so far, despite tariffs.
  
• We upgrade Asia ex-Japan equities to an Overweight allocation. A weaker USD leads to more inflows into Emerging Markets (EMs). Valuations are appealing. We expect China and Korea equities to outperform within Asia ex-Japan. Korean equities have cheap valuations and good growth. The catalyst will come from fiscal expansion and market reforms from the new administration, which can narrow the Korean discount to other EMs. Chinese equities’ risk premium is subsiding – Beijing playing its ‘rare-earth’ card helped contain the trade war from escalating. India is a core holding. It is structurally attractive. Fiscal stimulus is a strong tailwind, although valuation is expensive.  
  
• We downgrade US equities to a core holding. Earnings is strong, but the ‘de-dollarisation’ narrative warrants a scaling back of excessive long positions. Europe ex-UK is a core holding. Rising fiscal spending is offset by tariff concerns.
  

North America equities – Core holding     —

20 JUNE 2025

The Bullish Case:

+ Tailwind from a soft-landing scenario

+ Deregulation and tax cuts

+ Technology sector propelling performance

The Bearish Case:

– Fears of resurgent inflation

– Elevated policy uncertainties

– Expensive valuations

Europe ex-UK equities – Core holding     —

20 JUNE 2025

The Bullish Case:

+ Fiscal stimulus

+ Recovery in economic sentiment

+ Attractive valuations

The Bearish Case:

– US tariff threat

– Cyclical and structural headwinds

– Earnings revisions deteriorating

UK equities – Less Preferred holding     ∇

20 JUNE 2025

The Bullish Case:

+ Relatively less affected by Trump 2.0

+ High dividend yield; cheap valuations

+ Relatively defensive sectors

The Bearish Case:

– Challenging economic and earnings outlook

– Restrictive monetary policies

– Low exposure to growth sectors

Japan Equities – Core holding     —

20 JUNE 2025

The Bullish Case:

+ Further improvement in foreign interest

+ Corporate governance reforms

+ Secular reflation

The Bearish Case:

– Political, global trade uncertainty

– Rebound in JPY to hurt company earnings

– EM competing for fund flow

Asia ex-Japan equities – Core holding     Δ

20 JUNE 2025

The Bullish Case:

+ Strong FX cuts input costs, lifting earnings

+ Attractive valuations; Low positioning

+ China’s fiscal and monetary stimulus

The Bearish Case:

– Structural issues eg, deflation in China

– The threat of tariffs

– Chip restrictions

Δ Overweight     ∇ Underweight    — Neutral

Bonds – at a glance     —

20 JUNE 2025

• Our multi-asset income (MAI) strategy has remained resilient amid all the noise and turbulence in Q2 25, delivering 2.1% over the past 3 months, with solid performances from dividend-paying equities, High Yield (HY) bonds, Emerging Market (EM) Local Currency (LCY) bonds and sub-financials.
  
• Our MAI strategy continues to deliver a steady yield of c. 5.7%, which remains attractive in the current rate environment. Over the next 6-12 months, we expect the Fed to resume interest rate cuts. Investors should look to lock in higher income, capitalising on yield spikes to benefit from attractive income and potential capital gains.
  
• Under our base case of a US economic soft landing, we continue to see further upside in equities and thus remain comfortable in tilting slightly in favour of equities over fixed income. Our equity allocations are balanced between income-generating equities and traditional growth equities. Within fixed income, our expectation of a weaker USD supports our case for increased allocations into EM LCY bonds. Lastly, we expect US Agency Mortgage-Backed Securities (MBS) to continue to outperform Developed Market (DM) Investment Grade (IG) government bonds.
  

Developed Market Investment Grade government bonds – Core holding     —

20 JUNE 2025

The Bullish Case:

+ Attractive yield by historical standards

+ DM monetary policies are mildly dovish

The Bearish Case:

– A shorter-than-expected rate cutting cycle

– Fiscal and tariff policies uncertainties

Developed Market Investment Grade corporate bonds – Less Preferred holding     ∇

20 JUNE 2025

The Bullish Case:

+ Attractive yield by historical standards

+ Attractive relative value against benchmark government bonds

The Bearish Case:

– Relatively tight yield premium

– Deterioration of fundamentals could reduce relative attractiveness

Developed Market High Yield corporate bonds – Core holding     —

20 JUNE 2025

+ Deregulatory policies to support earnings

+ Current yield remains attractive

The Bearish Case:

– Deterioration of fundamentals could reduce relative attractiveness

– Higher default or restructuring risks

Emerging Market USD government bonds – Core holding     —

20 JUNE 2025

The Bullish Case:

+ Supportive commodity prices

+ Weaker USD will reduce debt servicing costs and improve credit fundamentals

The Bearish Case:

– A shorter-than-expected Fed cutting cycle

– Policy uncertainties create volatility especially when valuation is rich

Emerging Market Local currency government bonds – Preferred holding     Δ

20 JUNE 2025

+ EM fiscal strength built up in recent years

+ Policy rate cuts, higher overall yield and a weaker USD supports performance.

The Bearish Case:

– Geopolitical and global trade uncertainties

– Significant market risk-off mode causing outflow of funds

Asia USD bonds – Core holding    —

20 JUNE 2025

The Bullish Case:

+ Regional growth remains resilient

+ Bullish investor positioning and supportive technicals

The Bearish Case:

– Softer China economic growth outlook Higher default or restructuring risks

Δ Overweight     ∇ Underweight    — Neutral

Commodities – at a glance

20 JUNE 2025

• Gold has limited near-term upside if Middle East tensions stay contained, but remains a key strategic hedge. We raise our 3-month price expectation to USD 3,400, but leave our 12-month expectation unchanged at USD 3,500.
  
• Oversupply remains the dominating theme in oil markets. We expect West Texas Intermediate (WTI) oil prices to trade in a range around USD 65/bbl over the next 3-12 months. Geopolitical risks may result in temporary spikes in oil prices.
  

Oil

20 JUNE 2025

Gold      —

20 JUNE 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     —

20 JUNE 2025

The Bullish Case:

+ Diversifier characteristics

The Bearish Case:

– Equity, corporate bond volatility

Δ Overweight     ∇ Underweight    — Neutral

Multi-Asset – at a glance

20 JUNE 2025

Our multi-asset income (MAI) strategy has remained resilient amid all the noise and turbulence in Q2 25, delivering 2.1% over the past 3 months, with solid performances from dividend-paying equities, High Yield (HY) bonds, Emerging Market (EM) Local Currency (LCY) bonds and sub-financials.

Our MAI strategy continues to deliver a steady yield of c. 5.7%, which remains attractive in the current rate environment. Over the next 6-12 months, we expect the Fed to resume interest rate cuts. Investors should look to lock in higher income, capitalising on yield spikes to benefit from attractive income and potential capital gains.

Under our base case of a US economic soft landing, we continue to see further upside in equities and thus remain comfortable in tilting slightly in favour of equities over fixed income. Our equity allocations are balanced between income-generating equities and traditional growth equities. Within fixed income, our expectation of a weaker USD supports our case for increased allocations into EM LCY bonds. Lastly, we expect US Agency Mortgage-Backed Securities (MBS) to continue to outperform Developed Market (DM) Investment Grade (IG) government bonds.