Vincent Mortier
Since the start of the year, some of the key convictions highlighted by Amundi, Europe’s largest asset manager, have been playing out and some trends have accelerated.
According to Vincent Mortier, Group CIO, Amundi,” We are witnessing a regime shift characterised by heightened policy uncertainty and a distinct break in the international order. These key themes were highlighted at the Davos World Economic Forum and confirmed at the Munich Security Conference.
“Tariffs remain a key tool for the redesign of the new order. The recent Supreme Court ruling against Trump’s emergency tariffs introduced an additional layer of uncertainty to the policy landscape.
“All these developments confirm that the overall geo economic environment is in transition. President Lagarde’s mention in her speech of the ECB’s new repo facility for central banks outside the euro area signifies how policymakers are thinking about the rising importance of geoeconomics.
“We are clearly entering a more complex market equilibrium, where policy, including trade policy, geopolitics, and capital allocation are as critical as the economic cycle itself. With growth proving more resilient than initially expected and corporate profitability remaining robust, markets have remained well sustained.
“However, significant rotations are underway across countries, sectors, and individual stocks as the environment adjusts to the ongoing regime shift.
“We think diversification and flexibility will continue to be key in enhancing portfolio resilience and long-term returns.
“We see a late cycle environment continuing this year and therefore maintain a moderate risk on stance. Within this stance, we expect a rotation towards real economy sectors such as industrials and dispersion across regions and asset classes.
“Secondly, high valuations of risk assets constrain our ability to raise our risk stance. Valuations alone, however, are unlikely to trigger a major correction. Instead, triggers would more likely arise from liquidity tightening or a deterioration in credit conditions.”
In a fast changing world, please see the attached paper for more details, with contributions also from Monica Defend, Head of Amundi Investment Institute and Philippe d’Orgeval deputy group CIO as they relook at their key investment convictions.