China has successfully adjusted to a lower trend growth rate, and policymakers are driving a significant shift in income distribution towards households and away from businesses. While this means China will not play the same locomotive role globally, it will make Chinese expansion more politically as well as economically sustainable and the global economy less exciting but more stable.
Recommendations in Barclays Global Outlook include:
- Underweight fixed income in developed markets
- Favor high yield over investment grade credit and expect US financials to outperform industrials
- Overweight equities in developed markets
- Balance allocation to the relatively low-risk US with positions in Europe and Japan
- Overweight emerging markets external and local debt
- Do not overweight emerging markets equities generally, given limited prospects for growth acceleration and FX appreciation
- Buy gold against the yen – gold is the one commodity which may receive some support from central bank actions and we expect the yen to depreciate by as much as 10% in response to easier monetary policy from the Bank of Japan
Barclays Global Outlook research report, published quarterly, provides an assessment of all major economies and outlines the likely implications for global financial markets, including commodities, credit, economics, emerging markets, equities, fixed income and foreign exchange.
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