April 20, 2015 Stocks fell last week after testing the top of the trading range that’s been in place since November. Friday’s sell-off was driven by China’s moves to rein in its hot stock market (lifting restrictions on short selling and raising margin requirements) and further brinksmanship between Greece and its creditors. We see further upside in Chinese H-shares due to favorable valuation and the prospects of further monetary policy easing by Chinese authorities. We also assign a low probability to Greece leaving the euro area, especially given that the Syriza government has no voter mandate to abandon the euro. We remain overweight stocks as we see the global economic recovery continuing in 2015.
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