- Amundi Investment Talks
Amundi Investment Talks
Thursday, March 26th, 11:00am (CET)
Central Banks 'bazookas' have been put in place and the size of the fiscal push under discussion in the US is also huge.
Our Speaker: Vincent Mortier - Deputy Group Chief Investment Officer
Moderator: Ernst Osinga - Head of Cross Border Marketing
As a result markets are giving some signs of optimism, at a time when real economic indicators are starting to show the severity of the shock.
Will these extraordinary measures be enough to calm down markets? How should investors deal with this phase of uncertainty?
Tune in on Thursday as our Deputy Group CIO, Vincent Mortier discusses how markets are digesting the recent measures and what investors should focus on at the moment.
Amundi Investment Call – Week 3 Key Take Aways
Crisis assessment - Volatility has been high because we are facing a new type of crisis – healthcare, economic and financial. Visibility on GDP and earnings growth is low, but unlike the 2008 crisis, the policy response this time has been extraordinary ($2 trillion package vs Obama’s $800 billion in 2008) and has been put in place early on. While we believe markets will bottom out before the end of the pandemic contagion, the ‘Bazookas’ will not be effective without virus containment. If the global lockdown is effective, the peak of pandemic will be in April but we will get clarity in the coming weeks.
Investment approach - The current backdrop calls for cautious approach as risk aversion will persist in the short term. Core bond yields (UST and Bunds) will remain low given the current policy measures, leading investors to search for yield elsewhere, particularly in EM debt and credit space (IG). However, selectivity, bottom-up selection and active management are key amid risk of rising corporate defaults. There are also pockets of selective opportunity in equity in value and high-quality cyclicals.
Prioritise liquidity management and avoid permanent impairment - Liquidity management is a top priority now. Secondly, we recommend investors to preserve long term value and avoid permanent asset impairment. Eventually we are confident that markets will recover, but if a company goes bankrupt, it will never recover. Therefore, focus now should be on minimising credit events, and maintaining portfolios that are capable of a rebound once the situation stabilises
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Central banks have confirmed the shift to a much more accommodative stance.
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