Growth in focus: finding the ace among A-Shares
Amid China’s long-term structural growth trends, which are the sectors that could stand out in the A-Share market?
Geopolitical uncertainties from rising US-China trade tensions and the risk of a no-deal Brexit are clouding global growth and investment prospects. And investors are bracing for a more challenging investment landscape ahead.
Geopolitical events generally have a temporary impact on financial markets. But the US-China trade row continues to attract the attention of investors as its development could disrupt financial markets over a longer term.
The latest US tariff hike to 15% on US$300 billion worth of imports from China roiled global equity markets. Notably, this occurs as global industries hit a downturn cycle. Such moves disrupt trade and investment and could negatively affect the labour market, which in turn, could hurt US consumer sentiment. This further raises the probability of the US economy sliding into a recession.
Persistent uncertainties and a late cycle environment may continue to roil financial markets. Our Multi-Asset Solutions (MAS) team takes a cautious view on risks and asset allocation. For the JPMorgan Multi Income Fund, our MAS team has:
Escalating trade tensions have increased the probability of a recession in the US over the next 12 months. Still, corporate earnings forecast for 2020 have yet to adequately price in such risk factors.
Overall, with global growth expected at below-trend alongside potential sluggish corporate profit growth, equities aren't likely to have an attractive upside. On the contrary, corporate credit could offer higher income potential than equities with similar total returns. And should market volatility rises, corporate credit is likely to face a lower downside risk.
Under current market conditions, the investment team of the JPMorgan Multi Income Fund continues to hold a bias towards corporate credit, while increasing portfolio liquidity by moving to shorter-maturity bonds with a view to managing risks.
Rising US-China trade tensions and other geopolitical uncertainties continue to cloud market sentiment. Amid heightened market volatility, the JPMorgan Multi Income Fund strives to capture income sources globally, dynamically responding to changing market conditions through a well-diversified multi-asset portfolio that seeks attractive income and a balanced risk and return profile.