“That makes even more sense if there’s a slowdown in North America and some of the emerging economies in Asia go the other way and stay relatively strong,” said Mark Stacey, Senior Vice-President and Co-CIO AGFiQ Quantitative Investing, Head of Portfolio Management at AGF Investments. “Then again, the U.S. may end up being a stable place for investors in the case of a recession.”
According to John Christofilos, Asia currently leads the way in terms of equity flows, with AGF’s trading desk receiving more calls about Asia ex China. That’s followed by the U.S., and then Europe, which has fallen out of favor ever since the Ukraine War started.
While Chinese equities have been unfavourably perceived for a while, Way pointed to several encouraging drivers that could be changing that, such as additional fiscal stimulus from the government and an anticipated rate reduction from the Bank of China.
In addition, the nation is getting closer to approving its first mRNA vaccine to protect individuals against COVID-19, which could lessen the likelihood of another catastrophic shutdown like the one in Shanghai earlier this year, which significantly affected economic activity.
“Regulatory restrictions on technology are being lifted as well and some sectors of the economy including real estate have been hit so hard already, they may have nowhere to go but up from here,” Way added. “That said, investors need to be patient. Demand is still not where it needs be on this front despite some of the fiscal measures being put in place to support consumers and businesses.”
