Outlook 2024
Executive summary
The year 2024 will be marked by the continued normalization of monetary policy around the world, heightened geopolitical tensions and uncertainty about the decline in inflation.
Rising interest rates and bond yields have fundamentally changed the basis for all investment decisions. This paradigm shift will favour bond investors, who will benefit from higher expected returns, but will further weaken highly indebted actors, especially governments.
Although interest rates have peaked, structural inflationary pressures, such as rising protectionism or the energy transition, will certainly increase the risk of higher inflation than we have seen in recent decades.
As we enter 2024, undoubtedly a year of transformative change, investors' agility will be an asset in seizing the opportunities that volatile markets will offer in the quest not only for wealth preservation but also for real growth.
Economic Outlook
Slower growth ahead but still slightly above potential
US growth to outperform developed peers
China growth upgraded to 4.6% in 2024
Headline inflation falls in all G10 economies except Japan
Core inflation has also fallen, but at a slower pace
Developed central banks have reached the end of their hiking cycle
Monetary policy normalization underway in Japan
Best Investment Opportunities
High nominal and real yields provide a means of locking in cash flows
Front end of curve attractive due to flat yield curve beyond 3 years
Interest rate cuts make cash less appealing
Emerging market corporate debt offers attractive carry
Yields of around 8% for high yield are rare and followed by double-digit returns
European equities set to outperform US equities
Small caps or equal-weighted index trading at significant discount to large caps
Favourable risk/reward profile for Chinese equities
Key Risks
Rising inflation could delay central bank rate cuts
US consumer spending slows sharply
China’s economic woes persist
Unchecked geopolitical tensions and conflicts
Table of contents
- OUTLOOK 2024: EXECUTIVE SUMMARY
- A BRIEF REVIEW OF 2023
- RESILIENT GLOBAL ECONOMY IN 2023 WITH DIVERGENCES
- OUTLOOK FOR 2024
- INVESTMENT CONVICTIONS FOR 2024
- ASSET CLASS VIEWS
