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Coronavirus in Context

July 2020

We look past the headlines to provide investors perspective on the coronavirus’ impact on economies and asset classes.

2020 Midyear Investment Outlook:

Covid-19 Alters the Storyline, But Key Themes Endure

Covid-19 has taken a staggering human and economic toll, yet we see signs of encouragement. Our 2020 Midyear Investment Outlook explores what investors may expect across economies and asset classes in the second half.


By: Paul Hsiao, Economist, Hong Kong

China’s Economic Indicators Tick Up As a Gradual Recovery Continues

More than three months since the world’s first coronavirus lockdown, which slowed activity in the world’s second-largest economy to a standstill, China’s economic indicators are beginning to pick up again – and we expect the rebound to continue to accelerate in the second half of the year.

By: Paul Hsiao, Economist, Hong Kong

China’s 2020 National People’s Congress: Measured, Muted, and Modest

China’s economy continues to show signs of recovery as a result of Beijing’s back-to-work program, and we expect activity during the second half of the year to rebound sequentially.

By: Markus Schomer, CFA, Economist, New York

Are the Curves Bending? Tracking the Economic Impact of Covid-19

We break down the flood of information into five key areas to gauge where we are now and what may lie ahead.

By: Paul Hsiao, Economist, Hong Kong

Asia’s Fiscal Response to COVID-19: Progress Made and What’s to Come

While Asia nations are at various stages of the outbreak and fiscal responses have varied significantly, we believe many of the steps taken thus far will help mitigate the worst impacts – and as key macroeconomic data begin to roll in, we think much more stimulus is on the way.

By: Markus Schomer, CFA, Economist, New York

Epic Surge in US Jobless Claims Offers First Glimpse of What's to Come

As economic indicators start coming out in the next few months, it's worth reminding ourselves that none of this is really a surprise, and much is already largely priced in.

By: Paul Hsiao, Economist, Hong Kong

Fed’s 'Shock and Awe' Puts the Ball in the Fiscal Court

We expect the trajectory of the virus and its impact on macroeconomic fundamentals to be the top-of-mind for policymakers around the world.

By: Paul Hsiao, Economist, Hong Kong

Asia Macro: As Central Banks Step on the Gas, It’s Time to Put Fiscal Policy in the Driver’s Seat

While the coronavirus poses significant headwinds to the Asian economy, we’re encouraged by swift policy responses and remain optimistic about longer-term growth trends.


Investment Strategy Insights

Fiscal and Monetary Collaboration: So Complex, It’s Really Very Simple

Recent policy moves to address the impact of Covid-19, though driven by common objectives, may appear oddly circular – with fiscal authorities issuing massive amounts of debt that independent central banks then buy up.

By: Hani Redha, CAIA, Portfolio Manager, Global Multi-Asset, London

Multi-Asset Views: Bright Spots in the Distance?

Our focus is on balancing the need to protect portfolios against downside risk with remaining flexible and open to adding risk when opportunities present themselves.

Fixed Income:

Fixed Income Asset Allocation Insights

An Improving Economy Favors High Yield

High yield assets look compelling against a backdrop of better-than-expected economic results, and sustained inflows have kept demand high.

Featuring: John Yovanovic, Head of High Yield Portfolio Management

We’re Optimistic on High Yield. Here’s Why.

John Yovanovic, Head of High Yield Portfolio Management, discusses the impact of fallen angels and unprecedented central bank actions on the high yield market and his outlook for the asset class.

Featuring: Dana Burns, Portfolio Manager, US Dollar Investment Grade Fixed Income

Once-in-a-Cycle Opportunities in US Investment Grade Credit

US Investment Grade Credit Portfolio Manager Dana Burns discusses the impact of fallen angels on developed markets investment grade credit, the opportunities we’re seeing, and our outlook for the period ahead.

Leveraged Finance Asset Allocation Insights

For Now, High Yield Has an Edge

While we find both high yield and bank loan markets attractive, we continue to favor high yield, which stands to benefit from retail demand, direct Fed support, and fallen-angel issuers entering the market and trading at attractive levels.

By: Steven Oh, CFA, Global Head of Credit and Fixed Income, Los Angeles

Credit Update: How ‘Fast and Furious’ Fiscal and Monetary Policies Are Moving Markets

We believe investing in credit asset classes now should lead to positive outcomes down the line, but there may be some bumps along the way.

By: Securitized Products Portfolio Managers Gunter Seeger, Andrew Budres, and Henry Huang

What’s Ahead for Securitized Markets Amid the Covid-19 Crisis?

We look at the impact of the coronavirus crisis on the CMBS, MBS, and ABS markets, including potential pain points and areas that should prove resilient.

By: Steve Cook, Co-Head of Emerging Markets Fixed Income, London and Jonathan Davis, Client Portfolio Manager, Emerging Markets Fixed Income, New York

EM Corporate Debt: Fallen Angel Risk Is Real, But Not as Severe as Perceived

We take a closer look at the factors driving expectations for the rate of fallen angels among EM investment grade corporates.

By: Arthur Lau, Co-Head of EM Fixed Income, Head of Asia ex Japan Fixed Income, Hong Kong

Policy Measures Support Asian Debt amid Global Coronavirus Spread and Oil Crash

With the exaggerated pressure on government bond yields, high-quality bonds with attractive yield pick-up, such as Asian credits, will continue to see strong demand amid rising global recessionary risk.


By: Anik Sen, Global Head of Equities, New York 

Equity Insights: A Spike in Market Dispersion Creates Alpha Opportunities

Equity market inefficiencies like we’re seeing today create fertile ground for stock selection, and we see attractive investment opportunities across a variety of countries and industries.

By: Anik Sen, Global Head of Equities, New York and Christopher Pettine, CFA, Healthcare Analyst - Global Equities, New York

Equity Views: Progress on Covid-19 Treatments Will Drive Demand Recovery and Market Moves

We expect a flurry of news in the coming weeks on progress toward Covid-19 treatments, which could be critical in driving the rate of demand recovery and, in turn, equity markets.

By: Taras Shumelda, Portfolio Manager, Equities Fundamental, New York

Oil’s Historic Plunge: Who Says You Can’t Get Something for Nothing?

We look at what prompted the unprecedented oil price moves, and what it means for energy stocks and oil markets going forward.

By: Siddhartha Singh, Investment Director, Asia Equities, Hong Kong

Asia Equities: The Pandemic Shall Pass, But So Shall the Opportunity

Given the unprecedented scale of disruption caused by the coronavirus pandemic, which has shut down most segments of the global economy in ways not seen since the Second World War, investment models based on past economic slowdowns or macro theme-based approach will prove less useful guides.

By: Anik Sen, Global Head of Equities, New York

Equities Are Responding Well to Tail-Risk Removal in the Covid-19 Crisis

Lessons from the financial crisis are informing Covid-19 policy – and equity markets are responding as policymakers act quickly, work together, and go big to reduce tail risks.

By: Siddhartha Singh, Investment Director, Asia Equities, Hong Kong

Indian Equity Market: Navigating With Prudence and Simplicity

An unconstrained approach to Indian equities offers the flexibility needed to navigate turbulent markets.

By: Siddhartha Singh, Investment Director, Asia Equities, Hong Kong

Silver Linings: What We Are Seeing on the Ground in Asia

Being fully cognizant that the recovery will be contingent on containment of the virus followed by its cure, we would like to highlight some bright spots emerging from Asia.