Investment Strategy - Q4 2024
Daniel Varela, CIO of Piguet Galland, shares our investment convictions for the 4th quarter of 2024 with you.
Has monetary easing begun?
After a few months of price stagnation, disinflation is picking up pace once again in many parts of the world. In fact, consumer prices are already within the comfort zone of most central banks.
In short, the time has come to ease monetary policies in industrialized countries to avoid an unexpected drop in inflation and economic activity.
A phase of synchronized global monetary easing is on the horizon, allowing for an optimistic outlook on the future. Especially since Chinese authorities have recently followed the lead of Western central banks by announcing a broad program of monetary and fiscal stimulus measures.
Is economic recovery in sight?
Interest rate cuts are arriving at just the right time as economic activity slows. The world has so far avoided a recession, thanks in large part to the American consumer, who continued to spend, particularly on imported goods.
The monetary easing that has begun should lead to a recovery in sectors more sensitive to interest rate changes, particularly industry and construction, which are suffering from declining investments in most countries.
Admittedly, the geopolitical environment has not improved and remains the main risk factor for the economy. In this regard, we will need to keep a close eye on a potential spike in energy prices, a traditional transmission belt between political crises and economic shocks.
Are market prospects favorable?
In the absence of an exogenous shock linked to geopolitics, a context of economic resilience and monetary easing generally signals good performance for financial markets.
The bond market should benefit from this environment for some time. However, in Switzerland, yields have already fallen significantly. Therefore, investments in listed real estate funds, which still offer attractive net-of-tax yields, are preferable.
But it is in the equity markets where the best performance opportunities are emerging. Historically, periods of falling interest rates have been conducive to strong stock market growth, especially when the economy avoids a recession.
Strategy & Market Overview
POTUS, Kursk, AI, gold, inflation, recession, interest rates, China... You're all asking the same question: how to approach the 4th quarter of 2024?
