, Thomas Poullaouec, the head of diversified asset solutions for Prudential Asia-Pacific, and his team released their latest report, outlining global asset allocation views and investment environment outlook. Due to increased uncertainty in policies, especially trade threats, overall steady global economic growth and a trend of declining inflation may be under pressure, leading to a more cautious outlook. The strong performance of the US economy puts it in a favorable position in the event of escalating trade disputes. However, other major economies may face greater risks due to slowing growth. Trade may become a factor widening the gap in central bank policies, with the Federal Reserve maintaining its stance to evaluate the impact, while other central banks, including the European Central Bank, are easing policies faster due to the risks of slowing growth. Key risks in the global market include: the impact of escalating trade war threats on economic growth and inflation, central bank policy mistakes, and geopolitical tensions. President Trump, as promised during his campaign, swiftly took action by using tariffs as a negotiating tool. The implementation of tariffs is mainly based on creating a fairer trade policy and securing border protection. In general, this tougher stance has worked in the past, with trade partners quickly taking action to reach agreements or at least defer tariffs. However, for countries more reliant on trade, the risks are quite high. Although the US has a strong economic foundation and low trade vulnerability, if these actions evolve into a prolonged trade war, especially with the current high level of inflation, the US will not be immune to potential consequences. Given the increasing uncertainty, there has been a moderate decrease in overweight exposure to stocks, as there is a growing downward risk bias at current valuation levels. Considering that economic and profit growth continues to support market performance, the overweight exposure to stocks is being maintained. However, with the increased uncertainty in policies, elevated valuations may negatively impact market trading. As the market is expected to broaden, cyclicals with more attractive valuations are favored. In terms of regional allocation, exposure to Chinese stocks has been increased to an overweight level. Compared to 2017, China is better prepared to handle a trade war this time, and is expected to introduce stronger stimulus measures in response to US tariffs, driving market upturn. With stable economic growth and the possibility of global trade disruptions leading to higher inflation, bond yields may remain at elevated levels, thus maintaining an underweight allocation to bonds. Although valuations are high, high-yield bonds are still attractive, with strong fundamentals and low default expectations. As a measure of active risk diversification, the underweight exposure to global investment-grade bonds has been reduced. However, given the continued strength of the US dollar, while reducing currency risk, a short duration is still maintained. Cash remains attractive in comparison to mid-term bonds. With market expectations of the Federal Reserve gradually easing policies, the downside risk for cash returns is relatively low.