Escalating external risks have forced us to reconsider our more positive outlook in the preceding quarter’s strategy report. Uncertainty over US policies and their impact on growth, interest rates, USD strength and direction of portfolio flows are weighing on EM sentiment and creating volatility in the forex markets. Hopes that the US economy would provide a lift to global growth are not assured, while the growing wave of antiestablishment sentiment could put the EU in danger of disintegration.
Resilient domestic consumption patterns, infrastructure project implementation and improving outlook for commodities are positives for 2017 corporate earnings. Still a trading market that requires astute stockpicking. Overweight Utilities, Construction, Oil & Gas, Basic Materials and Aviation.