Amundi’s outlook for 2024 projected a move back towards high-quality bonds, excitement for Asian emerging markets and stability in mid-cap investments.
Group chief investment officer Vincent Mortier and Monica Defend, head of the Amundi investment institute, marked out their predictions for next year in a press conference today (23 November). The duo focused on five main investment themes for the upcoming year, including a sustained focus on energy transition, emerging markets in Asia, a turn towards cyclical markets as Fed rate cuts come into play, a growing appeal for bonds, and adding onto equities by the end of 2024.
Amundi forecasts that there could be a rise in equity volatility in the next year, while the bond/equity correlation could reverse. The company’s outlined investment sequence focuses on quality credit at the beginning of 2024 and ending the year by adding in emerging markets local debt dependent on a pivot by the Fed and a weaker US dollar.
“We are more convinced than ever that high-quality bonds are back and should be a part of any portfolio,” Mortier said.
While Mortier noted the value of stability in mid-cap markets including utilities, telecom, energy, and banks, Asian emerging markets stood out as an area for growth. In China, foreign direct investing has grown on average over 20% from 2020-2022 versus 2015-2019, with India, Vietnam and Taiwan just behind.
“India which has always been expensive for good reasons,” Mortier said. “We think it would be a big mistake not to be exposed to Asia.”
Defend marked a US recession as the main game changer from a macro perspective. Currently, the portfolio is underweight for the US as the team waits for better valuations. The US presidential election, which will be decided in November 2024, will also shift some expectations, Defend said.
“According to us there are two aspects we will need to consider,” Defend explained.
“The first one is the way the outcome of the election will craft the relationship between the US and China. And the second goes into the fiscal policy and in particular, the attitude of current candidates towards the Green Deal.”
In its presentation, Amundi marked out the need for a tripling in investment in green energy in the short term to get on track for net zero.