Emerging Markets

Copper prices are vulnerable to the downside in the coming months on a narrowing global supply-demand deficit. We expect that copper prices will plummet by 15-20% from the current level. However, the lingering structural supply deficit will put a floor under copper prices after this correction.

This week we present our Portfolio Allocation Summary for February 2023.

The risk-on rally is challenging our annual forecast so we are cutting some losses. But we still think central banks and geopolitics will combine to reverse the rally later this year.

The regulatory clampdown on Chinese platform companies is over. However, these companies have entered a new phase of active government control. Going forward, most platform companies’ strategic and business decisions will prioritize national interests, at the expense of shareholder interests. After the recent sharp outperformance, we suggest reducing the allocation to China's Investable Index from neutral to underweight within both global and EM equity portfolios.

When does rising unemployment become a bigger problem than inflation? The Fed won't cut rates until that happens, probably thwarting market hopes of big cuts in 2H.