Amundi Investment Talks 8

Amundi Institute, Investment Talks

Thursday, April 16th

11:00am (CET)

Our Speaker

Didier Borowski - Head of Global Views

In this weeks call, Didier Borowski gives his views on some recent market events.

Dear All,

Thank you for joining the Amundi Investment Talks Call this week.

We believe there are signs of cautious optimism in respect to the virus cycle.

Fiscal measures implemented in Europe and the US, appear to be stabilising markets.

Patience and caution are required for investors to navigate the current market environment:


Key Take-Aways

Silver lining in the clouds
 
The worst seems to be over with respect to the virus cycle as a result of the social distancing measures implemented by governments. Despite that, we should not be overly optimistic because lockdown measures will only be lifted gradually and we will continue to see negative newsflow around the economic cycle (recent US unemployment data) which is not yet fully priced in by the markets. On the other hand, there has been positive news relating to the agreement between OPEC and its allies to cut oil production by about 10 million bpd. While it may prevent a freefall in prices, the deal doesn’t completely offset the fall in demand and as long as demand remains weak we do not expect prices to rebound rapidly. The decision is supportive for some EMs in the near term but EMs that are sensitive to commodity prices will still be under pressure.

Policy actions continue

In the US, the Fed’s decision to intervene in credit markets is unprecedented and is likely to support liquidity, although it will take time for complete normalisation. The Fed is also providing credit to SMEs, state and local governments that would support macro financial stability in the US. In Europe, the monetary and fiscal emergency measures implemented so far are enough for stabilisation, despite a disagreement on debt mutualisation. However, now the debate is centred on how to finance a recovery plan and what innovative financial instruments can be used for that. Governments seem to be in a wait-and-see mode and evaluate how the situation evolves so that they can take actions on a recovery plan later. Elsewhere, the PBoC’s move to continue monetary easing is part of the global approach to stabilise markets and then to kick-start the economy with accommodative measures.

Investment approach

We believe investors should be patient and cautious in the current volatile environment when markets are unpredictable and newsflow is likely to remain weak in the near term. However, we believe opportunities exist for long-term investors who focus on quality in credit as well as in equities. Investment grade credit could benefit from central bank actions in the Euro area and the US, although monitoring liquidity is crucial. In equities, corporate earnings will remain under pressure, and in our opinion GDP is unlikely to recover soon. This in turn underlines the importance of bottom-up stock selection, balance sheet strength and resilient business models.

IMPORTANT INFORMATION

This material is for Professional Clients only and is issued by Amundi Asset Management. Unless otherwise stated, all views expressed are those of Amundi Asset Management as at the date of publication. These views are subject to change at any time based on market and other conditions and there can be no assurances that countries, markets or sectors will perform as expected. Past performance does not guarantee and is not indicative of future results. Investments involve certain risks, including political and currency risks. Investment return and principal value may go down as well as up and could result in the loss of all capital invested. This material does not constitute investment advice or an offering of any investment fund shares or units and does not take account of the investment objectives or needs or suitability requirements of any specific investor.

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