BNP Paribas Asset Management

We believe recent M&A activity indicating the first major combinations of traditional bricks-and-mortar retailers with major online retailers in the US has strategic implications, not only for the US grocery industry, but across broader retail segments.

A number of global equity indices have reached historic highs in recent months. The European equity market has not done badly, but has lagged behind markets in other developed regions, notably the US. Today, however, Europe is back in investors’ good books.

European banks have frequently been in the headlines of the financial media this year. We have seen bank bailouts in Italy, mergers and acquisitions in Spain, large volumes of primary bank issuance as governments sold their stakes and the sector has remained a proxy for market sentiment on future European Central Bank (ECB) rate policy.

The performance of global listed real estate markets will be sensitive to how central banks behave over the next few months, in particular to movements in interest rates triggered by changing central bank monetary policy, especially in the US, the eurozone and Japan.

At Impax, BNP Paribas Asset Management’s partner specialising in environmental markets, we conduct our own proprietary research. This includes visiting the facilities of the companies in which we invest and meeting its managers.

In the wake of the US presidential elections, the prospect of tax cuts, deregulation of the financial sector and infrastructure spending awoke animal spirits. Confidence indicators on the outlook for business among large companies, small business owners and consumers surged.

The Chinese economy was stabilised with another dose of monetary and fiscal easing in 2016, but the imbalances – credit growth that is too strong and opaque, inefficient state-owned enterprises and a bubbly housing market – have hardly been addressed. Thus, our structural worries about China remain. We think that economic growth in China is still structurally on a slowing trend.

In one regard, Japan is somewhat comparable to the US: conditions in the labour market are tight, but wages are not rising.

Looking at leading indicators and the eurozone economic outlook, the scene is set for strong growth, in our view. Taken literally, results from surveys including the purchasing manager indices (PMIs) and the economic sentiment index point to 3% to 4% year-on-year (YoY) growth.

Which assets stand to benefit?