The firm said its optimism is grounded in a very positive long-term outlook for China and other emerging markets, which gives equities a bias to rise over the medium-long term.
James Millard, chief investment officer at SIG, said that while the region is unlikely to be spared from any marked deterioration in the eurozone, it is expected to continue to outperform “all of the developed world” for a long time.
"Having tightened policy significantly in 2010 and 2011, we expect policy to be loosened further over the next few months and significantly if that proves necessary," Millard added.
He pointed to the People’s Bank of China’s reserve requirement ratio cut earlier this month, which was the first loosening of monetary policy since June 2008, and said further loosening to boost growth and to ensure a smooth leadership transition later in the year is likely.
Emerging market debt is also considered in a positive light, alongside emerging currencies and sterling.
Meanwhile developed equities in the UK, US and developed Asia have been given a negative rating by the committee, as has the euro.
"SIG remains overweight non-government bonds, although it has reduced the size of its overweight positions because of the uncertainty in Europe," Millard said.
He argued profit growth remains strong with companies holding a large amount of cash on their balance sheets, which should enable them to weather economic weakness and keep default rates relatively low and well below the levels implied by current bond spreads.
"We continue to have a small overweight to emerging market debt. In contrast to most developed economies, the financial position of most emerging economies continues to improve. This should lead to tighter spreads. However, with emerging market spreads already much tighter than corporate bonds, we should expect the outperformance of EMD to lag that of corporate bonds."
