Banishing the blues: Investors have plenty to look forward to in 2024

Ninety One’s Sahil Mahtani discusses the tailwinds afoot for 2024

Image with a white cup of frothy coffee. Words BLUE MONDAY and sad mouth drawn in the layer of foam. Top view. Blue textured background. Blue Monday, the Monday of the last full week of January is the day when most people feel sad, down, or melancholy.


By Sahil Mahtani, head of macro research at Ninety One’s Investment Institute

Yesterday was Blue Monday – allegedly the most depressing day of the year – but investors shouldn’t be blue about certain parts of the market.

Despite a slowing economy and possible recession on the cards, there are attractive entry points in areas supported by positive structural macro themes.

We think there are especially interesting opportunities in emerging markets, credit, and equities this year, where investors need to look to duration, locking in higher yields and acquiring assets that have been marked down.

Emerging Markets

High expectations for Chinese growth may have disappointed last year, but net flows into emerging markets have remained positive since 2020. Stable foreign direct investment inflows have accounted for 60% of balance-of-payments funding, compared with 20% for portfolio inflows.

Commodity-producing nations have been particularly fortunate thanks to the fact that commodity prices have generally remained firm. New industrial demand plays into the hands of many emerging market countries, which are in fundamentally better shape than developed markets in times of stress.

We expect Latin American economies such as Brazil and Colombia to benefit the most given their very high real rates, positive inflation dynamics and solid external balances. Fundamentals in many emerging markets remain underappreciated and the emergence of a multi-polar world will boost capital investment and growth across the developing world.


Credit experienced a bear market in duration last year, as developed market sovereign bond yields rose. At the same time, continued low default rates and sharply reduced issuance narrowed credit spreads.

The weaker economic environment expected this year (and the reset in the cost of capital) are likely to increase default rates and consequently widen spreads in 2024. However, we see interesting potential in specialist segments such as bank senior and subordinated debt, as well as structured credit, where we believe investors are overcompensated for credit risk compared to traditional high-yield and investment-grade corporate bonds.

See also: Momentum: Seven risks for investors to watch for in 2024

Credit markets have repriced for a new inflation and interest-rate regime. Investors should therefore favour assets that will be resilient to structurally higher cost of capital, in addition to other forms of diversification. For example, elevated real interest rates on US inflation-linked bonds offers attractive return with an embedded inflation hedge.


The double-digit return of the S&P 500 last year might have people forgetting that the US index still has some way to go before recovering to its high in December 2021.

We saw a low-quality rally in 2023 that was driven by composition and narrative. The performance of equity markets in 2024, however, will be significantly impacted by trends in US inflation and economic growth. Consumer confidence in the US already boomed in December thanks to improving business conditions and a strengthening labour market.

The energy transition also provides stability for the year ahead, with the need to cut emissions and heightened desire for energy security driving higher capital spending. With transition-related equities massively de-rated following steep hikes in interest rates, we believe now is an attractive entry point into some of the best-positioned companies in this area.

To avoid the winter blues, investors should embrace greater flexibility in asset allocation, add duration and take advantage of thematic opportunities – there are always opportunities despite the gloom.

See also: US inflation ticks up 0.3% in December: Could interest rate cuts be pushed back?


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