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July 2016: Low visibility

As we head into the deep summer months, markets remain delicately poised. The vote for Brexit proved a clear shock, throwing up all manner of potential ramifications. On the other hand, however, the global economy is still proving resilient. Growth is set to continue, albeit not at a blistering pace and with some areas of concern.

A further positive factor is that in contrast to previous eras we now have policymakers used to putting out fires. In fact, since 2008 and a whole array of crises, there is now a sizeable support infrastructure able to provide an adequate response. Thus, with the fallout from Brexit still clearly liable to weigh on markets, central banks are standing by, ready to deploy increased easing measures, particularly in Europe. Having said that, we are also looking for more decided action from the EU itself: in order to mitigate knock-on effects from Brexit, reform will need to be forthcoming – Brussels needs to show it is adaptable in order to moderate market concerns.

Indeed, what the vote for Brexit implies is a clear disconnect between ordinary people and their elites, largely attributable to a rise in inequality, which has the potential to result in increased instability. The rise of Donald Trump is part of this phenomenon, meaning political risk is not only a concern in Europe, but across the Atlantic as well. Consequently, there are enough reasons to be cautious over the summer, so we recommend staying neutral across the asset classes. Visibility is low.

This cautious stance is further highlighted in our new equity allocation. We take down our overweight stance towards European equities off the back of heightened risks related to Brexit and re-allocate towards US stocks, which are significantly more defensive in nature.

As for our stances vis-à-vis bonds, no changes are in order. Government bonds continue to be underweighted due to anaemic yields; investment-grade corporate bonds are preferred, providing stability to a portfolio, but also a yield pick-up. EMB are at neutral; fundamental risks vs Fed action is a balancing act. High-yield credits are set at neutral: higher energy prices are a tailwind but there are signs that balance sheets are deteriorating.

Nordea Private Banking in Singapore

From the private banking branch in Singapore, Nordea serves the growing community of Nordic individuals in Asia.

Nordic businesses are growing in Asia and are attracting more Nordic professionals to live and work in the region. The Nordic expatriates in Asia are also staying longer than they used to.

Singapore is the centre for private banking in Asia, and Nordea offers private banking services to the growing community of wealthy individuals from its branch in Singapore. The Singapore team is composed of experienced, senior private bankers with financial market expertise who are supported by highly qualified operational staff.