Geoffrey Yu 3.1 4 ideas

Strategist stated, "the Swiss franc is going to be the best performing currency in Europe. Full stop." In a risk-averse environment with a major energy-induced terms-of-trade shock, the CHF benefits as a traditional safe-haven. The SNB may have a higher tolerance for franc strength now as it helps limit imported inflation from higher energy prices. The combination of safe-haven flows and a potentially less interventionist SNB supports further CHF appreciation against European peers. The SNB surprises markets with aggressive intervention to weaken the franc, or a rapid resolution to the geopolitical crisis triggers a broad risk-on rally.

Despite being major oil importers, Korea and Taiwan are currently the "two best markets in the world." Investors are prioritizing the AI/Tech hardware cycle (which drives these economies) over the energy input cost shock. The market positioning suggests resilience in high-tech manufacturing hubs. Long Korea (EWY) and Taiwan (EWT) as they are attracting capital flight from other EMs. If oil prices stay elevated for too long, the current account deficits in these nations will eventually erode currency and equity value.

There are heavy outflows from Central and Eastern European sovereign bonds, specifically Hungary and Poland. Poland cut rates recently, which the strategist calls "brave" (risky) in this environment. The proximity to geopolitical instability combined with rate cuts during an inflationary energy shock makes these assets highly vulnerable to currency depreciation and capital flight. Avoid Polish equities and bonds. If the ECB cuts rates faster than expected, it might provide relief to these peripheral markets.