2021 has been a year of recovery for the high yield market, especially for equities. The main European indices (the Ibex 35 being one of the laggards) and the non-European selective indices have recovered from the heavy losses of the first year. 2022 will be a year of opportunity for the market, albeit with some risks. Leading investment companies outline these aspects in Finect’s forecasts, which set out the main investment characteristics for the coming year.
Will inflation hold, will investment uncertainty in China continue, will the technology rally continue, will stock markets reach new highs and will company valuations peak? Representatives from Schroders, BNP Paribas Asset Management, Natixis Investment Management, Nordic Asset Management and Edmond Rothschild discuss inflation, the opportunities in China, the energy transition, technology and demographics.) Equity, technology and sustainability will take centre stage in the new year.
Inflation will continue to dominate the market, but asset managers expect price increases to end in the second half of 2022. Inflation may be transitory, but it is more resilient than expected,” warns Sol Hurtado de Mendoza, managing director of BNP Paribas AM (Spain and Portugal). This view is shared by other investment institutions”. Growth will continue to be very good next year. The biggest unfinished business is the recovery of world trade. When this happens, the bottleneck will disappear and inflation will normalise,” says Daniel Pingalong, head of sales at Natixis Investment Managers.
Borja Fernández Canseco, account director at Schroders, says the main risk for 2022 is “mixed signals from the Fed’s misguided monetary policy”. He adds. If it really spikes and we have to take action to contain it, that would be a big shock to markets.
China is a double-edged sword for investment firms in the new year. This year has been characterised by the Chinese government’s regulation of large sectors of the economy. Sébastien Senegas, head of Southern Europe at Edmond de Rothschild AM, says the Asian giants should be excluded from the emerging markets category when making investment decisions. We believe they should be excluded from the category. China is the world’s second largest economy. The real estate sector, which together with construction accounts for 30% of GDP, is already in trouble. The government must ensure that the problems in the real estate sector are alleviated.
To position themselves in the Chinese market, Finect Outlook’s managers use indirect exposure products. The Schroder International Selection Fund Asian Equity Yield invests in Asian companies with “attractive yields and sustainable dividends”. Natixis IM introduced the Loomis Short Term Emerging Markets Bond Fund, which invests in emerging market corporate bonds from around the world, including China.
Equities, sustainability and technology
Equities will be the asset to beat next year,” says César Ozaeta, head of sales in Spain at Nordea AM. Corporate earnings are rising again this year. The performance of markets and risk assets has been very good over the last ten years. Barring mistakes in monetary policy, we believe this trend will continue. The Global Star Equity Fund is the product that Nordic fund managers recommend to establish a position in this asset class.
Schroders has added other asset classes to the equation that provide good returns in times of stagflation. According to the UK manager, low growth with high inflation is increasing week by week. Borja Fernandez is betting on equities, commodities and gold. Stagflation is a very favourable environment for commodities.
Gold is an asset that we see as a guardian. Fixed income has a more limited ability to defend against volatility, so gold has an important role to play and will attract more defensive flows from investors”.
The focus will be on sustainable investment and energy transition,” says Hurtado de Mendoza. Investors are no longer investing in geographic locations or the size of companies, but are looking at the big themes. The future of growth is green: “The energy transition is just beginning,” says the head of AM at BNP Paribas, who also highlights the growing importance of sustainable food. Food is very important and the future of our planet is on our plate.
Hurtado offers two investment vehicles for these themes: BNP Paribas Energy Transition and BNP Paribas Funds Smart Food.
Other fund managers, such as Edmond de Rothschild, are focusing on other megatrends, such as good business practices (EdR Fund Human Capital) and areas that will continue to develop in the technology sector, such as big data. Healthcare and climate change are two other themes that Sébastien Senegas believes will perform well in the market.
Natixis IM believes that, as in previous years, technology-focused stocks will perform well. Daniel Pingalong sees near-term prospects in technology sectors such as cyber security (Thematic Security Fund). ‘Sure, equities are not cheap, and they can be expensive, but compared to bonds they are quite overvalued. The outlook is positive.
Six experts, six investment ideas in 2022
Next Saturday (13 November), XTB will host a live online conference where six experts will present their investment ideas for the coming year.
One microphone, six experts, six investment ideas, 25 minutes each. This is the calling card for the “XTB Opportunities 2021” online conference, where speakers will share their favourite investment ideas. The event will take place on Saturday 13 November from 10:00 to 14:30 and will feature Pablo Gil, Chief Strategist of XTB Spain, Alejandro Estebaranz, President and Chief Investment Officer of True Value Fund, Heros Asset Mr. Ruiz, Ms. Rocio Recio, Head of Investor Relations at Cobas Asset Management.
Mr. Carlos Romero, Senior Institutional Investor Relations Partner of AZValor, and Mr. Javier, Chief Investment Officer of MapValor Asset Management. Relations Partner Carlos Romero and Managing Director Luis García of the Mapfre AM behavioural fund.
According to the latest performance rankings published by Expansión, all are owned by fund managers, including three independent entities with the best-performing funds of the year. The speakers defend their investment thesis on a single security by analysing the macroeconomic context and the economic outlook.
Each speaker will have 25 minutes to defend an investment thesis on a single security, analysing the macroeconomic context, the fundamentals (the key companies and economic indicators that investors will be looking at), as well as the earnings reports and economic forecasts for the beginning of 2022.
These investment opportunities will be available on the XTB platform from 15 November. Attendees will be able to watch the webcasts for free from any device and will be able to interact with the speakers in real time and ask questions to further explore each topic. Following the event, XTB clients will have exclusive access to a recording of the event. Non-clients will also be able to access exclusive XTB content by registering on the XTB platform.
If you would like to attend, please register via the XTB website. The conference will be streamed live and free of charge via the broker’s own app, desktop platform, XTB Spain’s YouTube channel and Movistar’s 125 optional business TV channels. With more than 15 years of experience, XTB is one of the largest equity and derivatives brokers with offices in more than 13 countries, including Spain, the UK, Poland and Germany. France, Latin America, the Middle East, North Africa and South Africa.