European equities currently present the highest growth prospects.

The Eurozone is experiencing a strong rebound in growth after a two-quarter cooling off, with purchasing manager indices, particularly in the services sector, on the rise across Europe. This positive trend is reflected in the recovery of European stock markets, although the recovery has been narrow, with value stocks like financials dominating the indices.

The US Federal Reserve has acknowledged improvements in economic conditions and progress on the labor market, signaling the early stages of a tightening cycle. However, US stocks appear expensive, with an average P/E ratio of 21.5. In contrast, European stock indices, with their larger weighting of value stocks, are expected to benefit from the upward trend in real bond yields.

China's economic indicators, including industrial production, retail sales, and construction, are currently below their three-year averages. The Chinese central bank has already taken action, announcing a 50 basis point cut in the banks' reserve requirement ratio, and further supportive measures are expected in the coming months. Despite this, Beijing's increasing regulatory interventions could potentially threaten China's growth.

The US economy grew at an annualized rate of 6.5 percent in the second quarter, around 2 percentage points below the consensus forecast. In contrast, the Eurozone seems to be exceeding consensus growth forecasts overall. Retail sales in Europe are already above the pre-pandemic trend, and business activity has picked up at its fastest pace in 21 years. Bank lending conditions in Europe are no longer as restrictive, which should have a positive impact on future credit growth.

The recovery in US profits has so far tracked the development of GDP, and further increase in corporate profit growth this year is unlikely unless GDP growth forecasts are revised upwards. On the other hand, the view on the Eurozone has been upgraded to overweight, with smooth vaccine rollouts allowing governments to lift lockdown measures, boosting the outlook for European stocks.

Japan and the UK are viewed positively, and regional indices like STOXX Europe 600, Nikkei 225, and Hang Seng help track these trends distinctly by region. Meanwhile, emerging markets have shown resilience with strong economic growth but face potential volatility due to trade talks.

US monetary policy remains the most accommodative among major economies, providing a supportive backdrop for US stocks. However, the potential for volatility in emerging markets and regulatory risks in China could present challenges for investors in the coming months.