“Certainly at the beginning of the year, we were more bullish on the dollar. At the time, everybody thought that Trump would do some fiscal stimulus and we would go to a reflationary trade,” Poser said during a media briefing in Hong Kong yesterday.
“But at some point, when we saw that Trump got stuck, that was the time when we dodged the bullet and stopped that kind of trade.”
He doesn’t expect inflation to spike in key economies and the world economy, which is growing in a roughly syncrhonised way already, does not need any fiscal stimulus.
The bank first said that it was shifting its strategy from the hunt for yield to position for a reflationary environment in February. At the time, Poser said he favoured value stocks, high yield bonds and senior loans.
Now, the bank favours equities that pay dividends. In terms of sectors and markets, it likes emerging markets and technology, according to Poser.
Indeed, year-to-date, emerging market equities and global technology stock have outperformed the global equity markets, according to data from FE Analytics.
“We think that emerging market equities are also the best performing market,” Poser said.
Looking at bonds, Poser favours high yield bonds and local currency emerging market bonds, since they offer a high coupon and their fundamentals are favourable.
He avoids safe government bonds in the US and Europe, where yields are too low. He also said he does not like emerging market hard currency bonds as they are richly priced.
Year-to-date, global high yield bonds have outperformed government bonds and the overall global bond market, according to FE data.
