Global Investment Views - June 2024

Thursday 13 June 2024

The overall stance on risk assets stays slightly positive, with rotation opportunities in equities, towards segments (such as Europe, UK) that have lagged behind in this year’s rally. However, this is clearly not a call for increasing risks in portfolio. Some segments in lower-rated corporate credit such as HY show an asymmetric risk-return profile. In addition, any volatility on US inflation could affect Fed actions, which would eventually impact interest expense for companies. Thus, our focus remains on quality in credit in EU and US, and we continue to be cautious on businesses with excessive debt.
On government bonds, a deceleration in inflation is constructive for USTs, which also provide protection in case of a slowdown in economic activity expected in H2 in the US. But we remain active to take into account any surprises on inflation and Fed actions.
Emerging markets present opportunities in bonds and equities, led by strong growth and domestic demand. But due to the divergences across EM, we are selective. We also take into account geopolitics and country specific factors such as government finances in our decision making. For instance, in China, the recent measures in the real estate sector are positive for near term sentiment, but do not yet allow us to turn positive.