Summary

• 2022 ought to be characterised by strong consumer demand in DM and a substantial reopening dynamic in EM, clouded a tad by US monetary policy moves. But the Omicron variant threatens to spoil it
• A new wave of the pandemic could not only slow down global demand…
• …it could cause major convulsions in the asset markets
• US Fed would have to balance inflation risk against keeping the economic recovery intact
• China’s pandemic and credit stress management would be crucial for global market sentiments
• Emerging economies face the risk of Covid resurgence on one hand and Fed liftoff on the other hand
• Medium-term imperatives are climate change, inequality, tech wave, geopolitics, and debt overhang

Macro Strategy

Rates

• Fed policy normalisation and curve flattening at play

Currency

• USD stronger amidst uncertainties

Credit

• Default risk will bottom, but there will be plenty of issuances to hold through the cycle

Equities

• Re-opening trade for Asean economies
• Buy selected dips in China/HK