Emerging Markets

To produce a moderate economic recovery, at least RMB 3 trillion in additional government expenditures is needed in H1 2025. Our bias is that Beijing is not yet ready to launch such a massive fiscal support measure. Hence, volatility-adjusted equity returns in China will be poor.

This week, we cover the main questions we fielded during our latest client trip in Europe. Among the many topics broached are Europe’s recession odds, the impact of China’s stimulus, and the outlook for European markets.

We maintain 37% odds of a major recessionary oil shock, 51% odds of minor shocks, and 12% odds of no shocks.

The month of October ahead of a US general election tends to be a volatile month with negative outcome for equities. As such, it is prudent to remain on the sidelines until after the election.