Equities likely to bounce back if virus outbreaks remain localised

Concerns about a second wave of COVID-19 have prompted a renewed sell-off in global equities. Our view is that this sell-off won’t last, and that most risky assets will make more headway this year, as economies continue to recover from their lockdown-induced slumps. Indeed, the latest economic data has been surprisingly strong. Crucially, though, this view is conditional to the outbreaks remaining localised, and renewed lockdowns not becoming widespread.