Post Covid-19 recovery in 2021: Favour Asia over developed markets

THE year 2020 has been an eventful one. The Covid-19 pandemic has driven economies into deep recession, but the record levels of intervention by central banks and governments around the world spurred economies to the shallowest of recoveries.

However, such intervention comes with repercussions. Loose credit conditions, essential in keeping businesses afloat, have led to flush liquidity that inadvertently drove global equities to record highs - all in a recession year.

The stark disparity between the macroeconomic backdrop and markets has raised concerns among our investors. Valuations across equity and fixed income markets are at heady levels, thanks to the combination of rising prices and earnings contractions this year. With most asset categories now trading at the top of their 10-year range, investors are indeed more vulnerable to potential corrections ahead.