The spread of Covid-19 outside China has rattled risk assets in the recent trading sessions. Investors triggered some profit taking in markets, which reached historical highs and even broke psychological thresholds in previous weeks. The atmosphere of fear has remained consistently high only in the so-called safe assets — the USD, UST and gold — signaling that investors have been looking for effective hedging strategies.
Our central scenario is for a temporary deterioration of the global economic picture in Q1 of this year, with some possible spill over into Q2, given that weaker-than-expected global trade growth is ultimately affecting industrial production and manufacturing activity and there are some impacts on the internal demand. Later on, we should see a recovery over the remainder of the year. Overall, we have downgraded global growth to 3.0% from 3.2%.
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