BNP Paribas Asset Management

China’s simultaneous industrial and internet revolutions lead us to believe that there are three structural trends which will drive long-term investment opportunities in the country: technological innovation, consumption upgrading, and industry consolidation.

To address adversity, you first have to recognise the nature of it; next, you have to know where it is and how it behaves and moves; to tackle it, you need to uncover all its secret weapons. And so it is with climate change: we have identified it and its sources; now we need to identify those who will take charge of dispatching of it, take the necessary measures and “rally the troops”.

Belegt u graag in een aandelenfonds met eigenschappen waar u volmondig ‘ja’ tegen kunt zeggen?

It would be an understatement to say that the Trump administration has presented challenges for the Federal Reserve: with the economy operating at around full employment, the government has introduced the sort of fiscal stimulus typically seen in recessions.

August saw large drawdowns in emerging markets, reminiscent of the trend seen in the second quarter, as assets sold off over a number of factors, most notably the deteriorating economic situation in Turkey.

Today when we look at yield, we tend to see it only in absolute terms but when we compare the yield/equity risk ratio of debt and equity, debt remains attractive: it is less volatile, less risky and can provide a steady return over time. Moreover, security rights are provided in cases of default. The yield offered is thus linked to the risk, which is quite low. These assets still deliver – thanks to the illiquidity premium – an additional return of between 100 and 150 basis points over bonds rated in the same category.

Emerging market debt (EM debt) has been the subject of much interest over the last few years, but recent volatility has created uncertainty about the asset class. We are convinced that besides offering an attractive return/risk ratio and the potential for high returns, current valuations constitute an attractive entry point.

Infrastructure debt has become an essential asset allocation component for investors looking to diversify their credit exposure with assets offering steady cash flow, an attractive risk/return profile compared to fixed-income instruments with an equivalent credit quality.

The past few months have been dominated more by politics than economic news. A new government with a radical agenda has formed in Italy, triggering a seismic re-pricing of ‘peripheral’ eurozone sovereign bond spreads. Meanwhile, an established government was toppled in Spain, but the market barely blinked.

Following a volatile last few months, we foresee a pause and potentially a reversal in some of the prominent trends. In particular, we expect US Treasury (UST) yields and the US dollar to stabilise in the near term, as we believe UST yields have already priced in good news in terms of growth, inflation and monetary policy tightening by the Federal Reserve. By contrast, growth in the eurozone economy has slowed, but the ECB has signalled its intention to end its asset purchase programme by the end of 2018.