Economy

Over the past few weeks, global equities have been hit by rising scepticism over the bullish AI narrative and increasing concerns over global growth. Stocks should stabilize in the near term, but the medium-term direction is to the downside. We expect the S&P 500 to drop to 3750 in 2025 and the 10-year Treasury yield to fall to 3%.

The prices of multiple financial assets have failed to break above their technical resistances. When this occurs, a breakdown ensues. In brief, global risk assets remain vulnerable. We are upgrading Chinese onshore stocks from neutral to overweight and offshore ones from underweight to neutral within EM and global equity portfolios.

China's cyclical and structural headwinds will likely undermine Beijing’s initiative to accelerate urban migration over the next five years.