China Could Be a Growth Engine for Global Recovery in 2H 2020

Global markets have not yet reached a bottom, but Nick Niziolek believes the global economy and markets could be in recovery mode by the second half of the year, with China and other overseas markets making strong contributions. The Calamos international portfolios remain focused on preserving capital during these volatile markets, while also being positioned ahead of positive inflection points.

Summary of Key Views

  • The trajectory of the coronavirus outbreak will be different in the U.S. versus what’s been seen in Asia, with cultural differences and technological factors helping containment efforts in Asia.
  • Vaccine progress, mitigation progress, and the global fiscal/monetary response are three key factors that will alleviate market uncertainty; the team is viewing economic data through this tri-fold lens to determine when to begin significantly re-risking portfolios.
  • Based on what has occurred in China and Italy, a peak in new cases—a deceleration in growth rates—will be crucial in helping the market find its bottom. We expect markets will begin to recover before the war against the coronavirus is won—investors will be encouraged once they see the U.S. is committed to defeating the virus.
  • The global economy and markets may well be in recovery mode by year-end, with strength in overseas companies and cyclical growth.
  • The Calamos global and international portfolios were well served by aggressive de-risking as the coronavirus outbreak began.
  • Portfolios include names benefiting from e-commerce, e-learning and e-medical tailwinds.
  • Data is likely to get worse from here and the team is cautious near-term, but at these levels there are opportunities to begin re-positioning for the anticipated recovery, including in cyclical growth.