Forget about the Delta variant slowing economic growth!
There are some key risks to the equity outlook to be concerned about for the remainder of 2021, stalling growth from the Delta variant is not one of them for most advanced economies. Nevertheless, investors should monitor rising China tail-risk as overleveraged property developers like China Evergrande wobble financially. As China Evergrande falls into the “too big to fail” category, we expect Beijing would step in to resolve any defaults in an orderly manner to minimize the fallout. In addition, U.S. equity prices may stumble once the market gains greater clarity on Biden’s plan to raise corporate tax rates.
From an economic perspective, the global recovery should continue into 2022 and beyond and be supportive of higher stock prices. Expect some volatility over the coming months, but investment-oriented accounts should maintain their equity commitments.