With limited upside to our new June 2022 targets and neartermperformance risks as the bubble in Growth stocksdeflates we focus on Alpha thematics. Favour Value / Cyclicals,Financials, Materials and Quality (APxJ-EM BBM v8). We stayUW China Internet, and move OW South Africa vs UW Taiwan.

Asia / EM equities significantly underperformed global peers in the last 6 monthsand some of the valuation excess has abated. We therefore now move EW onEM vs DM equities in aggregate, with Europe the most preferred global equityregion across the strategy team (see Global Strategy Mid-Year Outlook: Now forthe Hard Part). Near-term risks for Asia/EM remain high, including Covidvaccination/variant dynamics, dwindling policy stimulus, internet sectorregulation in China and round-tripping last year's pull-forward demand in IThardware. Fund flows to Asia / EM have turned neutral and seasonality isunappealing for the next few months.