Jort van der Horst

The “rigid” European business community will have to learn to embrace change to remain internationally competitive. Investment opportunities abound on the old continent, but investors must look beyond its scratched image.

China’s 10-year bond yield has recently dropped below 1.6 percent, a consequence of a weakening economy plagued by deflation. For the first time in 14 years, restrictive monetary policy has shifted towards a moderately expansionary stance. The goal: to support the economy and repair reputational damage.

The concentration risk in equity markets is growing as US megacap technology companies continue to attract capital. Diversification, often seen as the only “free lunch” in investing, risks coming at a cost.

When consensus dominates the market, unexpected surprises often lurk just around the corner. Could the U.S. economy prove weaker than anticipated, while Europe is stronger than expected? Is the threat of inflation a thing of the past, or could it re-emerge with greater intensity?

Heavy rainfall in Spain led to floods in October, causing over 10 billion euro in damages. This is yet another manifestation of the global water crisis, which poses an economic risk to investors. Risk management increasingly involves steering towards sustainability, primarily driven by economic incentives.

The diversification advantage of bonds has been restored this year, as inflation has fallen and positive real interest rates have emerged. This is a relief, according to Flavio Carpenzano, Director of Investments at Capital Group, who still describes 2022 as a “worst-case scenario.”