As global markets continue to work through lingering conditions in these post-pandemic times, Jens Peers, CIO, Portfolio Manager, Sustainable Equities at Mirova US, an affiliate of Natixis Investment Managers, gives a brief outlook for equities in the second half of 2023 and whether there could be a resurgence in energy.
Jens: Stocks already had a nice run in the first half of 2023, in what is arguably a very difficult macroeconomic and geopolitical environment. For H2 we expect some of those conditions to ease but still lead to a lot of volatility.
We believe that interest rates will probably stabilise from here, but we’re also expecting inflation to stay high, albeit lower than we have had in the recent past. In such an environment, it’s likely that central banks will not be too aggressive; they certainly won’t be too prudent either. This is an environment in which we think equities may be able to rally.
Ideas in RNA and renewable energy
We see a lot of opportunities in areas that to some extent may have lagged the market a little bit more recently. But the future is still very very bright.
For instance, in the pharmaceutical industry, we see a lot of new developments driven by the mRNA* technologies – technology that was also used to develop the covid vaccines. We see these new developments happening in that space which could really lead to an increasing growth path for the sector that is certainly not factored in today, in our opinion.
The second area is energy. Renewable energy has lagged in the last couple of years mainly driven by an oil and gas rally, caused by the Russian/Ukrainian war, but also as a result of the spike in fossil fuel prices. There is typically a lag in catching up, but renewable energy characteristically does catch up and as those fossil fuel prices now stabilise, or even fall, we expect to see a catch up coming from renewable energy as well, which is also a very important area of focus for us.
This conversation has been taken from a video that includes other members of our Expert Collective discussing such topics as recession, earnings, valuations and where they are eyeing interesting growth and value ideas.
*Messenger RNA (mRNA) is a type of RNA found in cells. mRNA molecules carry the genetic information needed to make proteins.
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