The rivalry between the US and China in the technology sphere in particular could evolve into a "Cold War Mark II", according to the latest investment insight from CQS founder and senior investment officer Michael Hintze.
However, investors need to look beyond the usually considered risks linked to global trade, and also consider the risk of policy errors in light of the political pressure that is being felt by central banks. Another shift towards QE is being expected, but the question outstanding is whether it will be as effective as it has been in the past.
"With global nominal GDP of about $80trn and investable assets of around $300trn, how does one generate long term returns of 5%, 6% or 7%, or more, particularly in a world with $12trn of negative-yielding bonds?" asks Hintze. "In the medium-term, the effect of ECB QE should benefit Italian banks and we have been adding to positions selectively." he notes in the update.
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