Just as tech stocks led the recent market correction, they have also led the recovery with a recent gain of 6 per cent, Rupert Thompson, chief economist at has also used Japan’s sharp correction to upgrade it to ‘most preferred’ status; he retains his preference for UK over eurozone equities.

Ng, believing it is a good time to add to Japanese equities, advises clients to invest on an unhedged basis and, where appropriate. He prefers to invest in small and mid-caps that could benefit disproportionately from ongoing reforms and shareholder activism.

From a macro standpoint, Ng believes that Japan is in a sweet spot as the US’s key regional ally, and its talented manufacturing base should prove a valuable asset as supply chains realign. Finally, wage growth has now caught up with inflation, laying a better foundation for future consumption. The earnings' outlook remains bright as well, whereby global exporters are well placed in strategic supply chains, domestic businesses are re-discovering pricing power, and banks continue to benefit from the gradual monetary tightening cycle. See more commentary about Japan here.

Europe
Jesch believes that the current outlook for European companies is optimistic. The signals sent by companies are moderately positive, so 2024 should thus become the fourth year of rising profits in a row. Consequently, Jesch is maintaining his overweight view for the time being. However, this is at odds with Ng who retains his preference for UK over eurozone equities.

Emerging Markets
Jesch remains neutral on emerging market equities. Overall, it can be said that the headwinds are becoming stronger: “Some election results have disappointed the markets, the rather strong dollar and US interest rates have remained somewhat elevated. The renewed rise in geopolitical risks is also not playing into emerging markets' hands at the moment,” Jesch said. Meanwhile, Ng prefers Taiwan, India, and South Korea in emerging markets.

Fixed income 
Jesch highlighted that market turmoil has resulted in a slide of US 10-year Treasury yields by almost 0.6 percentage points within one month. Expected rate cuts should continue to support the prices of US bonds. He assumes that US central bankers are preparing for a "soft landing" rather than having to prevent a rapid, marked economic downturn. He remains neutral on 10-year US Treasuries.

Ng is also neutral on government bonds relative to its strategic allocation, favouring currency-hedged German bunds and UK gilts over US Treasuries. “Select European credit offers an appealing premium over US credit, currency-hedged,” he added. He keeps emerging market hard currency debt at neutral levels, with a preference for corporate bonds

Meanwhile, Jesch said that his favourites are still from Asia: “Yield spreads are expected to stay tight, and absolute yields, which are substantially higher than in industrial nations, appear to be attractive.” 

Alternatives view – commodities
With the gold price having done well during the turmoil at the end of July/start of August, Jesch confirmed its reputation as a safe-haven investment. He sees further price potential. Short-term, support might come from uncertainties with a view to economic development in the United States and the future rate policy of the Federal Reserve.

Jesch also noted that the current trend in crude oil prices reflects a robust supply situation. OPEC (with Russia) is expected to implement its long-term plan to increase production. In addition, the market has currently only priced in a very low risk of a supply disruption. Meanwhile, the growth of demand is an important driver of investor sentiment and a soft China is a negative influence because Chinese policy support measures are gradual and unlikely to be felt for some time.