Amundi Investment Talks 9

Amundi Institute, Investment Talks

Thursday, April 23rd

11:00am (CET)

Our Speaker

Pierre Blanchet - Head of Investment Intelligence

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

• The potential easing of lockdown measures in parts of Europe is positive.
• An agreement on a Recovery Fund in Europe is a key discussion point.
• Continued patience and caution are key.

Key Take-Aways

Sunshine beyond the Valley

Potential easing of the lockdown measures is positive, as some European countries plan to reopen and as the data shows the worst might be over in terms of the virus cycle. However, questions remain unanswered around collective immunity against the virus, the possibility of a second wave and about medical treatments. Elsewhere, while Emerging Markets have experience in dealing with epidemics, they lack the health care infrastructure. So, overall, the situation is improving but these are still early days. In commodities, oil prices moved into negative territory, reflecting concerns over demand/supply imbalance and technical factors related to the shortage of storage capacity.

Political will in Europe

Today’s European council meeting is important for the reason that investors would look for a political backing of the large package already delivered earlier. The key discussion point will be an agreement on a Recovery Fund in Europe that could add €500 billion to the total support package. Given that there have been doubts over the role of the EU in the current crisis, some clarity on the financing mechanism, types of instruments, and the time horizon for the fund could boost confidence in the European project. Another aspect that will give clarity to markets is the corporate earnings season, which has just started. Strong fundamentals are needed now to justify the stock prices going forward.

Separate wheat from the chaff

We are in a transition phase where both risks and opportunities are high but visibility is low. As a result, caution on risk assets is key. In equities, valuations seem unattractive given our view that consensus expectations might come down. However, some sectors and themes present long-term opportunities. Value has never been cheaper relative to growth in Europe and there are opportunities in mining, banks, and chemicals. ESG investing and deglobalisation remain key themes but selectivity is critical. Corporate credit could find support in the significant backstops provided by the ECB and the Fed, but liquidity considerations are paramount. Here, we believe EUR IG is interesting relative to the US, with an overall focus on identifying resilient business models and strong balance sheets.

No attachments this week 

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.