César Pérez Ruiz shares his “3 on the 3rd” for July

1. Chinese equities

In line with our Slow Unbundling theme, the US and Chinese economies are drifting further apart given China’s asynchronous easing cycle with the rest of the world and the capacity to do more in terms of both monetary and fiscal policy. In this context, we are adding Chinese equities, which are now at attractive valuations. Chinese equities are also positioned to benefit from the gradual reopening of the Chinese economy and we expect a further pick up on stronger policy support.  

2. Japanese yen

At the end of last year, we said that central banks would gradually exit their existing policy frameworks, in the Great Escape investment theme. Whilst most have since done so, one central bank is standing by its loose monetary policy: the Bank of Japan. Eventually, political pressure stemming from rising food and energy prices could lead the BoJ to change course and abandon yield curve control. For this, we are positive on the Japanese yen and negative on Japanese Government Bonds.

3. Macro strategies

Macro hedge funds continue to be well positioned to benefit from the significant economic and policy divergences around the world. In addition, their correlation with equities is low and we are now seeing these strategies start to outperform developed-market equities. This follows our Who pays the bill 2022 investment theme, as the costs associated with the pandemic and other events are unevenly distributed.