The upward trajectory for US equities is expected to sustain for the rest of this year. While rising enthusiasm for the US market is evident, it is time to focus on quality now – large cap quality names that see (i) sustainable earning and scalable business models, and (ii) low gearing and resilience to rising rates. Continue to ride the “vaccine winners” trade amid active sector rotations.
For the quarter ahead, continue to ride the “vaccine winners” trade with a tactical switch of upgrading Financials to Overweight and downgrading Energy to Neutral.
The former will be a geared beneficiary of broad-based economic recovery and rising inflation expectations while the latter sees headwind from the potential return of Iranian barrels in 2H21.
Auto-callable Recovery Coupon Performance Note
The Auto-callable Recovery Coupon Performance Note looks to stick to quality stocks with robust balance sheets, strong recurring revenue and earnings that generate decent cashflows with little or no leverage that should benefit from post-COVID normalcy.
The Note gives exposure to 3 US quality stocks in 3Q21 (Apple Inc, Honeywell International Inc, Visa Inc) via conditional coupon payments and potentially higher returns.
Please contact your RM for more information on the product idea.
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