Asset Allocation

Several countries drastically reduced their exposure to US government bonds in March. Treasuries worth $256.6 billion were sold, according to data published by the US Treasury.

According to analysts, the outflow was mainly driven by the fact that a number of emerging countries needed the money to support their own currency. The most important sellers were Saudi Arabia, Brazil and India. Saudi Arabia sold the most with $25.3 billion, but still owns $159 billion worth of Treasuries.

Global dividend yields are expected to fall between 15 and 35% this year as the coronavirus pandemic hits companies’ earnings, according to Janus Henderson Investors.

In the fastest and deepest correction we’ve ever seen, ESG strategies have held up relatively well. A webinar organised between Natixis Investment Managers and its affiliate asset managers Thematics AM and Mirova, the reasons behind this were discussed.

Romain Boscher of Fidelity expects a sharp divergence in stock market performance during the recovery phase, with financial health as the decisive factor.

‘Earnings expectations continue to deteriorate rapidly, and we are now expecting a decline of at least 20% in the most favourable scenario, with a potential decline of 30-40% in the least favourable assumptions,’ says Boscher, Global CIO Equities at Fidelity International.

US government debt is rising rapidly and the economy has come to a virtual standstill because of the coronavirus. However, treasury yields have never been this low. Yet, real alternatives to treasuries as a safe haven investment have yet to emerge, according to Quentin Fitzsimmons.

Chief economists are all waiting for the gradual lifting of lockdown measures. But otherwise, there’s little that unites them. Some are optimistic for the recovery to continue, while other believe markets are ahead of themselves.

The corona crisis is severely compromising the growth prospects of the world economy. ‘The stagnation of new infections in the main industrialised countries is good news, although concerns about certain emerging countries such as Russia, India and Brazil remain,’ says Keith Wade (pictured), chief economist at Schroders.

With a balanced performance since the beginning of 2020, Jupiter Dynamic Bond has confirmed its attractive status in the field of flexible and globally diversified bond funds. However, according to its manager, it is still too early to raise the portfolio’s risk level.

Companies with above average sustainability profile held up better during the first month of the corona crisis. The crisis thus confirms the importance of ESG integration not only from a climatic and social perspective, but also from a financial perspective.

A quarter of the 600 largest listed companies in Europe have already suspended or cancelled dividend payments for this year, according to a study by Germany’s DZ Bank. As a consequence, total dividend payouts are to fall by some €310 billion.

The bank’s analysts write that ‘an unprecedented cancellation of dividend payments is rolling over European stock markets’. They estimate 2019 payouts to fall by 23%, or €310 billion. 

The earnings season has started in Europe. But it’s a rather strange one. ‘All companies have stopped issuing guidance,’ observes Gilles Guibout, head of European shares at AXA IM. ‘That makes it difficult for bottom-up investors. So more than ever, we need a top-down approach now.’