https://archive.md/2023.05.19-042108/https://www.ft.com/content/97c0ffab-da61-4b29-ae6a-94b97c07155b
- Amundi, Europe's largest asset manager, is moving out of US assets in favor of China.
- The move is motivated by China's brighter economic prospects, better valuations, and a more benign outlook for inflation.
- Vincent Mortier, chief investment officer of Amundi, believes that too much risk is priced into Chinese credit and high-quality companies, while markets in the US are "too optimistic" as a recession looms.
- Mortier predicts that the US economy will not grow next year, while China, India, and Indonesia will each grow by 5 to 6 percent.
- Despite recent political tensions and disappointing economic data, Amundi is optimistic about China and has been gradually increasing its allocation to China and India over the past 12 months.
- Mortier is particularly keen on opportunities in select Chinese corporate bonds, arguing that foreign investors have been blanket selling without differentiating between the quality of issuers.
- US markets are pricing in a "goldilocks" scenario of low inflation, rate cuts, stronger earnings, and a soft landing, which Mortier thinks is becoming increasingly remote as financial conditions tighten.
- Mortier thinks inflation in both the US and Europe will stabilize at around 3 to 4 percent in the years ahead, with some volatility that will make the Fed's job particularly difficult.
- However, Mortier is not worried about the possibility of a US debt default.
Submitted May 20, 2023 at 06:15AM by objectdye https://ift.tt/iC8Pnwj
