Aktien
Aktien & Multi Asset Ausblick - Q4 2023
20 min zu lesen 10 Nov. 23
Ein Umfeld voller unbekannter Variablen
- So erschreckend die jüngsten Ereignisse im Nahen Osten auch waren: Die Finanzmärkte haben zunächst recht gelassen reagiert, mit einer gewissen Flucht in Sicherheit an den öffentlichen Märkten. Insgesamt fielen die Reaktionen eher mild aus.
- Sollte die Situation eskalieren – möglicherweise aufgrund einer erklärten oder vermuteten Beteiligung des Iran –, könnte dies zu verschärften Exportsanktionen bei Erdöl führen. Angesichts der derzeit angespannten Angebots- und Nachfragedynamik würde dies den Aufwärtsdruck auf die Ölpreise weiter verstärken.
- Die Investoren konzentrieren sich nach wie vor auf die Auswirkungen eines längerfristig höheren Zinsniveaus – also des „higher for longer“. Aufgrund der erhöhten Finanzierungskosten für Verbraucher und Unternehmen erscheint es logisch, mit einem weiteren Nachfragerückgang zu rechnen.
- Angesichts steigender Risikoprämien für Aktien haben wir in unseren Multi Asset-Strategien unser Engagement am breiteren Aktienmarkt verringert und in festverzinsliche Anlagen umgeschichtet.
Das makroökonomische Umfeld erweist sich als widerstandsfähiger als von vielen erwartet. Das gilt besonders in den USA, wo nur wenige Verbraucher und Unternehmen die höheren Zinssätze bereits spüren. Allerdings sinken dort die überschüssigen Ersparnisse, und die Rückzahlung von Studiendarlehen läuft wieder an. Daher könnten die verfügbaren Einkommen künftig erodieren. Angesichts steigender Risikoprämien für Aktien sehen wir weiterhin Möglichkeiten für eine positive Wertentwicklung; hinsichtlich des Aktienmarkts als Ganzem sind wir jedoch auf kurze Sicht vorsichtiger geworden. Im Rahmen unserer Tactical Allocation Multi Asset-Strategien haben wir das Engagement am breiteren Aktienmarkt verringert und in festverzinsliche Anlagen umgeschichtet.
Bei Aktien bevorzugen wir angesichts des unsicheren makroökonomischen Umfelds Anlagen, bei denen strukturelle Faktoren wichtiger sind als zyklische. Weiterhin interessant finden wir auch langfristige Themen wie Infrastruktur, das CO2-arme Ökosystem und Innovation, einschließlich KI. Kurzfristig eröffnen die verringerten Performanceunterschiede durch den jüngsten Ausverkauf möglicherweise neue Gelegenheiten, aus der Titelselektion Alpha zu schaffen. Die Sorgen wegen eines möglicherweise längeren Zinshochs hat die Bewertungen von Versorgern und Immobilienunternehmen auf Mehrjahrestiefs geführt. Daher sehen wir eine günstige Gelegenheit, in den Infrastrukturbereich zu investieren. Ein anderes Thema sind Wandelanleihen (Convertible Bonds / CBs), die im Niedrigzinsumfeld bei einigen Anlegern in Vergessenheit geraten waren. Dieser Bereich könnte von einem „higher for longer“-Umfeld profitieren: Auslaufende Schuldtitel und höhere Finanzierungskosten könnten die Unternehmen dazu veranlassen, günstigere Alternativen zu einfachen Anleihen zu suchen.
Die bereitgestellten Informationen sind nicht als Empfehlung zum Kauf oder Verkauf eines bestimmten Wertpapiers zu verstehen. Die in diesem Dokument zum Ausdruck gebrachten Ansichten sollten nicht als Empfehlung, Beratung oder Prognose aufgefasst werden. Die frühere Wertentwicklung stellt keinen Hinweis auf die künftige Wertentwicklung dar. Der Wert eines Investments kann sowohl fallen als auch steigen. Dies führt dazu, dass Preise steigen und fallen können, und Sie bekommen möglicherweise weniger zurück, als Sie ursprünglich investiert haben.
Fabiana Fedeli,
Chief Investment Officer,
Equities, Multi Asset and Sustainability
Die Narrative am Markt wandeln sich
Eigentlich wollte ich diesen Quartalsausblick mit einer vertieften Betrachtung der Auswirkungen von „higher for longer“ und der Frage beginnen, wie wahrscheinlich eine Rezession ist. Wir müssen uns jedoch drängenderen Ereignissen stellen: Das Quartal hat mit entsetzlichen Bildern aus dem Nahen Osten begonnen. Unsere Gedanken sind bei den Menschen, die von dieser sinnlosen Gewalt betroffen sind.
So furchtbar die jüngsten Ereignisse auch waren, die Finanzmärkte haben sie vorerst mit Fassung getragen. An den öffentlichen Märkten gab es eine gewisse Flucht in die sichere Anlage, da die Renditen der Staatsanleihen zurückgingen, aber insgesamt haben die Märkte recht milde reagiert, wobei viele regionale Aktienmärkte die Woche nach Beginn der Gewalt leicht im Plus beendeten.
Ihrem Verhalten nach zu urteilen, scheinen die meisten Investoren der Ansicht zu sein, dass die Ereignisse in Israel und Gaza eingedämmt sind und es keine weiteren Folgen zu befürchten gibt. Aus welchen Gründen könnte sich dies ändern? Die wahrscheinlichste und unmittelbarste Auswirkung könnte sich bei einer – erklärten oder vermuteten – Beteiligung des Iran ergeben. Dies könnte zu verschärften Exportsanktionen bei Erdöl führen. In den Medien scheinen unterschiedliche Zahlen zu kursieren, doch J.P. Morgan schätzt die iranischen Exporte auf 1,7 Mio. Barrel pro Tag1. Das Equity Research-Team von M&G Investments geht davon aus, dass ein Angebotsrückgang hauptsächlich von Saudi-Arabien aufgefangen werden müsste. Unserer Einschätzung nach will Saudi-Arabien einen höheren Ölpreis – jedoch nicht auf einem Niveau, das die Nachfrage zerstört und die Welt in eine Rezession stürzt. Daher würde das Land seine jüngsten Förderkürzungen wahrscheinlich rückgängig machen und die Förderquoten möglicherweise noch erhöhen. Allerdings ist die derzeitige Angebots-/Nachfragesituation bereits angespannt, und wir sollten mit einem weiteren Anstieg der Ölpreise rechnen. Während wir diesen Beitrag verfasst haben, gab es noch keine Schritte in Richtung weiterer iranischer Ölsanktionen. Doch wir wissen, wie schnell sich die Lage ändern kann.
Der Nahe Osten beherrscht – zu Recht – unsere Gedanken und die Schlagzeilen. Doch behalten die Märkte auch andere Themen im Blick: Die Nachrichten-Trends von Bloomberg zeigen, dass Themen wie Rezession und Inflation in der zweiten Jahreshälfte 2022 ihren Höhepunkt erreicht hatten. Gegenwärtig sind sie wieder auf das Niveau von Anfang 2022 zurückgefallen. Wenig überraschend ist, dass das Thema „higher for longer“ (also die Zinsentwicklung) immer stärker in den Fokus rückt.
Länger anhaltende hohe Zinsniveaus sind eine realere Möglichkeit als bisher angenommen: Diese Erkenntnis der Investoren ist der wahrscheinlichste Grund für die Rückgänge, die wir im August und September in den meisten Anlageklassen beobachten konnten.
Pause, wenn nicht sogar Stopp
Nach dem Rückgang in den USA begann die Kerninflation auch in Großbritannien und der Eurozone zu sinken. Im Vergleich zu den Zielen der Zentralbanken ist sie jedoch immer noch hoch: unabhängig davon, ob man von „in Stein gemeisslten“ 2 % oder einem Bereich von unter 3 % ausgeht. Die große Veränderung ist der rasche Anstieg am langen Ende der Renditekurve – sowohl in den Industriestaaten als auch in den Schwellenländern.
Die höheren Renditen könnten der US-Notenbank Fed, der Bank of England (BoE) und der EZB einen Teil der Straffungsarbeit abnehmen. Es wird immer wahrscheinlicher, dass die Zentralbanken eine Pause einlegen, um die Auswirkungen der bisherigen Zinserhöhungen auf die Wirtschaft zu beobachten. Angesichts des schnelleren Rückgangs der Kerninflation in den USA könnte die Fed dem Ende ihres Zinserhöhungszyklus am nächsten sein. Die Wahrscheinlichkeit einer weiteren Anhebung sinkt. Auf der November-Sitzung ist eine Erhöhung unwahrscheinlich. Solange sich die Inflation nicht dem Zielwert nähert oder sehr deutlich zurückgeht, werden die Zentralbank die Zinsen wahrscheinlich nicht auf ein für die Märkte beruhigendes Niveau senken.
Die ungewisse Rezession
Unsere Anlageteams treffen sich regelmäßig, um über die Märkte zu diskutieren. Dabei bringen sie die Blickwinkel aus ihren unterschiedlichen Anlageuniversen ein. Eines der am heftigsten diskutierten Themen ist die „ungewisse Rezession“: Also eine im letzten Jahr mehrfach angekündigte Rezession, die noch nicht eingetreten ist. Das makroökonomische Umfeld zeigt sich widerstandsfähiger, als viele erwartet hatten. Das gilt besonders für die USA – und es gibt eine gute Erklärung dafür: Nur wenige Verbraucher und Unternehmen spüren die höheren Zinssätze bereits. In den USA zahlen viele Haushalte feste langfristige Hypothekenzinsen, anders als etwa in Großbritannien. Auch viele Unternehmen mit länger laufenden Finanzierungen müssen noch keine höheren Zinsen bezahlen. Die Daten der Fed zeigen jedoch, dass die überschüssigen Ersparnisse der US-Haushalte aus der Zeit vor der Pandemie voraussichtlich 2023 erschöpft sein werden.
Zudem müssen die Studienkredite ab Oktober wieder bedient werden. Allerdings können die Kreditnehmer noch 12 Monate lang Zahlungen aussetzen, ohne als säumig gemeldet zu werden. Auch die Verschuldung über Kreditkarten hat zugenommen. Noch gibt es keine alarmierenden Entwicklungen. Doch die meisten Daten deuten darauf hin, dass die verfügbaren Einkommen sinken werden – wir müssen die Entwicklung beobachten.
Hinter diesen Daten verbergen sich jedoch wichtige und große Unterschiede zwischen den unteren und oberen Einkommensschichten. Gesprächspartner aus Unternehmen haben uns darauf hingewiesen, dass einkommensschwache US-Haushalte ihre überschüssigen Ersparnisse bereits aufgebraucht haben könnten. Einkommensstärkere dagegen könnten noch bis weit ins nächste Jahr hinein einen Puffer haben. Wir sehen auch große Unterschiede zwischen dem Subprime- und Prime-Segment, wenn es um unbesicherte Forderungen bei Kreditkartenfirmen geht. Das Prime-Segment hat sich von den Tiefstständen der Pandemie erholt, liegen aber immer noch unter dem Niveau von 2019. Das Subprime-Segment dagegen scheint darüber zu liegen.
Das Thema einer möglichen Rezession steht in den Nachrichten offenbar nicht im Vordergrund. Zudem lassen die aktuellen makroökonomischen Daten keine Anzeichen für eine schwere Rezession oder umfassende Kreditkrise in naher Zukunft erkennen. Dennoch erscheint es logisch, einen weiteren Nachfragerückgang zu erwarten. Verbraucher und Unternehmen werden mit höheren Finanzierungskosten konfrontiert. Dies dürfte sich auf ihre Kaufkraft auswirken.
Sollte es zu einer Rezession kommen, kann diese unterschiedlich schwer ausfallen. Die Risikomärkte könnten in einer leichten Rezession widerstandsfähig bleiben. Der DAX beispielsweise stieg in der ersten Jahreshälfte 2023, obwohl Deutschland in eine technische Rezession eingetreten ist: Das deutsche BIP sank im vierten Quartal 2022 um 0,5 % und im ersten Quartal 2023 um 0,3 % gegenüber den Vorquartalen. Auch Mitte Oktober lag der DAX immer noch im Plus, obwohl er im August und September – ebenso wie viele andere Aktienmärkte – an Boden verloren hat.
In unserem letzten vierteljährlichen Aktien & Multi Asset Ausblick haben wir eingeräumt, dass sich weltweit einige schwache makroökonomische Tendenzen und eine weitere Abschwächung einiger Daten zeigte. Andere Daten waren jedoch stabil geblieben. Es gab keine Anzeichen für einen unmittelbar bevorstehenden und tiefgreifenden Einbruch der weltweiten Nachfrage. Die Aussichten für die kurzfristige Nachfrage waren unklar, und es gab ein breites Spektrum möglicher positiver oder negativer Ergebnisse. Daher kamen wir zu dem Schluss, dass es zu früh sei, um bei Risikoanlagen die Hoffnung zu verlieren. Seitdem ist das Wachstum aus makroökonomischer Sicht zwar schwach geblieben, doch es ist nicht zusammengebrochen.
Größere Vorsicht
Die Realzinsen liegen mittlerweile sogar in den USA im positiven Bereich. Daher sind die Risikoprämien für Aktien gestiegen, was die Aktienmärkte unter Druck setzt. Dies könnte noch eine Weile anhalten. Obwohl wir weiterhin einige positive Entwicklungen bei Aktien sehen, sind wir auf kurze Sicht beim Aktienmarkt insgesamt vorsichtiger geworden. Im Rahmen unserer Tactical Allocation Multi Asset-Strategien haben wir das Engagement am breiteren Aktienmarkt verringert und in festverzinsliche Anlagen umgeschichtet.
Wir halten das lange Ende der Märkte für Staatsanleihen der Industrieländer nach den jüngsten Kursrückgängen für attraktiver. Dazu gehören auch die 10- und 30-jährigen Staatsanleihen der USA, Großbritanniens und Deutschlands. Es ist immer schwierig, inmitten einer Marktvolatilität den perfekten Einstiegspunkt zu finden. Die US-Notenbank nähert sich dem Ende ihres Zinserhöhungszyklus. In der Vergangenheit war dies ein Vorbote für Spitzenzinsen am langen Ende der Kurve. Dieses lange Ende dient auch als „Versicherung“ für den Fall, dass eine makroökonomische Verlangsamung deutlicher ausfällt als vom Markt erwartet.
Um es klar zu sagen: Wir flüchten nicht aus den Aktienmärkten. Wir finden weiterhin attraktive Bereiche – ein Vorteil, den ängstliche Märkte häufig mit sich bringen. Doch die Selektion bleibt entscheidend. Angesichts des unsicheren makroökonomischen Hintergrunds bevorzugen wir Aktien, bei denen strukturelle Faktoren wichtiger sind als zyklische. Wir bleiben selektiv und setzen auf ein hohes Qualitätsniveau. Wir investieren in Unternehmen mit einem tiefen „Burggraben“, hoher Preisgestaltungsmacht, starken Bilanzen und Cashflow-Generierung. Wir bevorzugen weiterhin langfristige strukturelle Themen, die sich unabhängig von kurzfristiger Volatilität durchsetzen sollten: Infrastruktur, das CO2-arme Ökosystem und Innovation, einschließlich KI.
Wichtig ist, dass wir nach wie vor nicht glauben, dass dies der richtige Zeitpunkt ist, um in die breiten Märkte zu investieren. Die Unternehmen kämpfen mit hohen Zinsen (und einem positiven Realzins), schwacher Nachfrage und unaufhaltsamer Innovation. Darum wird es auch künftig Gewinner und Verlierer geben. Wir halten es immer weniger für sinnvoll, ganze Sektoren oder Länder zu kaufen. Wir müssen eine Ebene tiefer gehen. Dies geht eindeutig aus den Einschätzungen unserer Experten hervor, die berichten, wie sie sich derzeit auf den Märkten positionieren.
Chancen suchen bei verunsicherten Märkten
Die Streuung der Aktienrenditen hat sich verringert, nachdem sie drei Jahre lang über dem 10-Jahres-Median gelegen hat: Dies zeigte sich während des Ausverkaufs an den Aktienmärkten im August und September. Darin sehen wir eine neue Gelegenheit, Alpha aus der Selektion zu schöpfen.
Abildung 1. MSCI AC World Index: Streuung der Querschnittsrendite (rollierender 3-Monats-Durchschnitt)
Quelle: M&G Investments, 30. September 2023. Rollierender 3-Monats-Durchschnitt der Aktienrendite im Verhältnis zum 10-Jahres-Median.
Wir sehen vor allem im Infrastrukturbereich günstige Gelegenheiten zum Aufstocken. Angesichts der Sorgen wegen einer „higher for longer“-Phase bei den Zinsen sind Versorger und Immobilienfirmen auf mehrjährigen Bewertungstiefs. Bei einigen dieser Unternehmen wurde in der Panik um die „Bond Proxies“ überreagiert. Viele der Firmen verfügen jedoch über solide Bilanzen: mit Festzinsverträgen, langfristigen Laufzeiten und der vertraglich vereinbarten Möglichkeit, gestiegene Kosten weiterzugeben. Zudem zahlen viele der Unternehmen attraktive Dividenden. Wie immer gilt: Die Selektion ist entscheidend.
Abschließend ein Wort zu einem Markt, den die Investoren nach Jahren der niedrigen Zinsen vergessen zu haben scheinen: Wandelanleihen. In den letzten fünfzehn Jahren führten die niedrigeren Zinssätze dazu, dass sich Unternehmen mit einfachen Anleihen zu attraktiven Konditionen finanzieren konnten. Doch die Finanzierungskosten steigen. Zudem erreichen viele Schuldtitel in den Jahren 2025-2026 das Ende ihrer Laufzeit – und zwar von Emittenten aller Art. Diese Unternehmen werden sich voraussichtlich gezwungen sehen, neue Schuldtitel zu begeben. Dabei dürften sie Wandelanleihen als günstigere Alternative in Betracht ziehen. Der Markt für Unternehmensanleihen ist jedoch erheblich größer als der für Wandelanleihen. Daher könnte die Entwicklung zu einer zusätzlichen Emission von Wandelanleihen führen, die der typischen jährlichen Emissionsrate entspricht. Dies dürfte mehr Möglichkeiten eröffnen, besonders bei den qualitativ höherwertigen Emissionen: Denn die Investoren werden zwischen mehr Emittenten wählen können.
Lesen Sie mehr über die Einschätzungen unserer Multi Asset- und Aktienteams. Freuen Sie sich auf wertvolle Erkenntnisse und tiefe Einblicke in die verschiedenen Märkte – während wir alle darauf warten zu erfahren, wie sich die unbekannten Variablen entwickeln werden.
Ich wünsche Ihnen ein starkes viertes Quartal und einen erfolgreichen Jahresabschluss.
Fabiana Fedeli
Chief Investment Officer, Equities, Multi Asset and Sustainability
1 Quelle: Bloomberg, Oktober 2023
Gautam Samarth,
Fund Manager, Multi Asset
An Episode in developed market (DM) bonds
The 'obvious' recession
What a difference a year makes! Heading into the end of last year, many blue chip economists were forecasting a global recession in 2023. They argued that the global system wouldn’t be able to handle a surprise 500 basis point plus rise in interest rates.
As it turns out, the relative resilience of economies, especially the US, to interest rate hikes over the past year has caught many market strategists off guard. As the year progressed, we’ve been presented with data of moderating inflation (albeit still at uncomfortably high levels), a strong labour market and robust economic growth. It caused a slew of Wall Street economists to capitulate on their bearish views and revise up their 2023 growth forecasts.
How did market participants get it so wrong?
It remains to be seen whether the monetary tightening measures put in place by central banks do eventually tip the global economy into a recession. The reality is that economies are complex, dynamic systems and our ability to understand the interplay between key economic variables such as interest rates, aggregate demand and supply, and inflation is limited. We should not expect to be able to predict economic outcomes with a high degree of certainty and as such the ‘error’ lay in having such high conviction in a recession to begin with.
The opportunity in government bonds
Big shifts in underlying economic beliefs are often times accompanied by violent asset valuation shifts. We witnessed this in 2022 as the market reassessed its beliefs about inflation being a temporary phenomenon or ‘transitory’ to something much more enduring, causing a sharp adjustment across all financial assets. We are currently witnessing something similar, with the market seemingly latching on to the idea that interest rates remain elevated for an extended period of time. The move has taken bond yields in some developed markets to levels last witnessed prior to the Global Financial Crisis (GFC).
Past performance is not a guide to future performance.
As mentioned earlier, such confidence in a particular economic outcome (‘higher for longer’ interest rates in this case) is generally misplaced, and such rapid price adjustments are often caused by behavioural factors (such as fear) rather than anything more fundamental. It remains just as likely today as it did a year ago that lagged effects of monetary policy start to cause stresses in the economy. Under such circumstances, long-dated DM debt could offer meaningful diversification. However, given recent price moves, and current levels of yield, they offer compelling value regardless, in our opinion.
Having been positioned relatively cautiously and carrying high cash balances through much of the year, our most flexible Multi Asset strategies have responded meaningfully to this episode. More specifically, these strategies have added significant duration through an increase in exposure to US 30-year treasuries, alongside initiating positions in 10-year gilts and 30-year bunds.
Daniel White,
Head of Global Equities
Fasten Your Seatbelts
My Bloomberg terminal informs me that the forecast probability of a US recession within the next 12 months currently stands at 55%. Although down from the recent peak of 65%, this remains elevated2.
However, as often is the case, there appears to be a dissonance between forecasts and asset prices. Despite the recent pull back, the S&P 500 Index is up over 13.0% year to date3. Some European equity indices have performed similarly well, with the Eurostoxx 50 and MSCI EMU Indices up 13.4% and 11.0% respectively4. If we really are heading into some sort of slowdown, the market has become remarkably comfortable with the idea.
It would appear a ‘soft landing’, at least in the US, is increasingly the base-case for many investors.
Recent history
It’s worth reminding ourselves that just over a year ago, FedEx – an economic bellwether – issued a sizeable profit warning, blaming signs of a global economic slowdown.
How have FedEx’s shares performed since their September 2022 profit warning? They’re UP over 85%!5
Whilst this share price performance may be surprising to many, it serves to highlight that investor expectations at the time were too bearish.
The global economy has undoubtedly ended up being more resilient than many expected. But as we wrote in our October 2022 publication, risks and uncertainties were 'beginning to create opportunities'. Twelve months ago we commented that 'the risk-reward for certain parts of the market appear[ed] attractive'.
Turbulence
Fast forward to today. Whilst the market’s ’soft landing’ slowdown scenario is entirely plausible, it is not a certainty. There are a number of potential headwinds that could cause some turbulence for the US, and de facto, the global economy.
Consumers’ excess savings, built up during the Covid era, are rapidly diminishing. The resumption of US student loan repayments will put incremental pressure on disposable incomes. Banks are tightening their lending criteria, at a time when customers are feeling the pinch from higher interest rates.
The United Auto Workers Union strike shows no sign of any immediate resolution, and while a government shutdown has been averted for now, the can has been kicked down the road rather than disposed of. Meanwhile, the ousting of the leader of the House of Representatives has further complicated the US political landscape.
Elsewhere, oil prices remain a wildcard, having crept back up towards $100 a barrel recently before falling back to around $80/barrel at the time of writing. Inflation has moderated but remains elevated, and the yield curve remains steeply inverted. Yet, rates across the curve have continued to march upwards. The market’s 2022 ‘Fed Pivot’ narrative has been replaced with a 2023 ‘Fed Pause’ thesis.
This all paints a highly confusing and somewhat contradictory picture. And one that is arguably not reflected in the valuations or earnings estimates for many companies today.
We think it’s the right time to exercise caution and remain selective. Trading on our global portfolios has been idiosyncratic. There has been no one particular theme or sector where we've seen increased opportunities or have reduced exposure. Stock specific purchases have included a French media conglomerate (in our Value strategies), and a unique infrastructure company with long concession, favourable regulation across key assets and good growth potential.
Ultimately, we favour idiosyncratic opportunities as opposed to the more macro sensitive names, and robust cash flows along with strong balance sheets rather than unsustainable cash burn and leverage.
Research insights
Industrials: Earnings forecasts resilient despite weakening lead indicators
Mark Wilson, Global Industrials Analyst
In industrials, for example, there are numerous lead indicators at levels implying a recession is ahead. A number of companies already talk of materially weakened demand from post-COVID supply chain normalisation, and the tailwind from inflation-driven price recovery is well behind us. And yet earnings forecasts for the sector remain very resilient.
At the same time, some lead indicators are already looking less bad, and there are notable positive data points, with companies raising expectations into 2024, and all sorts of narrative to support that more positive outlook and earnings consensus.
We don’t know the answer, but it’s hard to ignore bearish signals from near-term indicators with strong predictive track records. Like the excess savings helping consumers weather inflation, industrials have probably been helped by a brief period of pent-up demand from the supply chain bottlenecks post-COVID. Our fear is that many positive indicators are either backward looking, simply lagging the economy, or only a partial mitigation to the threat of broader slowdown.
But industrials is a heterogenous sector. There are always sub-industries more capable of side-stepping a downturn (such as aerospace and mining in this cycle), and there are always industries pricing in more weakness than their peers (freight operators, truck manufacturers and bearing companies spring to mind). We just have to continue to be careful in our choices and keep an eye on the longer term too. In a cyclical sector, periods of weakness can be brief, and can also provide good opportunities for investment in longer-term themes. The next ten years looks like they might be more exciting for industrial companies than the decade of balance-sheet repair and commodity busts we experienced post-GFC, with re-emphasis on local production, growing infrastructure investment in the US and Europe, and investment in de-carbonisation from copper mines to auto factories, to grid improvements and building energy efficiency. We take advantage of these longer-term structural tailwinds in a number of our global portfolios that are exposed to, for example, either providers of the technology (eg, e-mobility) or the infrastructure (eg. efficient resource management and recycling) to help the transition to a low-carbon global economy.
Retailers: Consumer resilience, but for how long?
Catherine Lock & James Doogan, Global Consumer Analysts
Consumer discretionary spending has continued to demonstrate resilience despite a confluence of factors, not least inflation, over the past 18 months. Consumer savings still appear elevated, which should support further spending in the near term. That said, savings have been depleted among lower-income demographics. Credit card delinquencies appear to have merely normalised to pre-pandemic levels. However, this data is backward looking and the market has been reactive to those data points, and we are hearing management comments that suggest consumer weakness could be appearing. Macy's shares fell 15% on back of the CEO's comment that the company had seen delinquencies rise across its credit card portfolio at a faster rate than expected6.
While certain stocks have de-rated sharply, valuations in aggregate are not demonstrating value versus history. The US retail index (XRT) is down 11% since the start of August but flat year to date7 as sentiment has improved from the lows of the third quarter of 2022.
Looking at expectations for US retailer year-on-year (YoY) margin expansion this year and next, we think these are optimistic, given the risk of weakening consumer spending, which would likely increase competition for a smaller pool of dollars.
There are interesting and resilient retail models and brands. Nonetheless, current market expectations combined with our longer-term caution on the structural challenges to retail cause us maintain our carefully selective approach to investment. Where the opportunity presents itself, we have been topping up existing names where demand looks to have stabilised for particular product categories and/or where companies have worked through post-COVID supply-side issues.
2 Recessions have historically occurred once every seven years or so. Thus a “baseline” probability of recession is about 15%.
3 Source: Bloomberg, S&P 500 Index total returns in USD - data through 30 September 2023
4 Source: Bloomberg, Eurostoxx 50 and MSCI EMU Indices total returns in EUR – data through 30 September 2023
5 Source: Bloomberg, 16 September 2022 to 30 September 2023
6 Source: Bloomberg, October 2023
7 Source: Bloomberg, 30 September 2023
Jeffrey Lin,
Head of Thematic Technology Equities
Opportunities in uncertain economic times
Technology sector revenue growth is correlated to macroeconomic conditions, but innovation continues even in uncertain economic times. Overall market conditions have been challenging for the sector in 2023, as evidenced by weak demand for personal computers, smartphones, weak IT services growth and cautious signals in much of the technology supply chain.
Nonetheless, there have been pockets of strong growth for technologies that can significantly improve productivity. Generative AI, for example, has the potential to significantly increase productivity which is driving strong demand for Nvidia’s processors to build out the technology for mass deployment. We also remain bullish on the prospects for electrification and autonomous vehicles that could further drive demand for the technology sector.
Providers of Enterprise software have already begun to enhance their products with Generative AI features to make their software easier to use and improve user engagement. Microsoft, ServiceNow, Workday, Adobe, Oracle and Intuit among others are incorporating Generative AI into their products.
It’s fair to say that spending for Enterprise IT has been slower more recently, on the back of softer business growth, pressures to contain costs due to higher inflation, and the uncertain economic backdrop causing companies to scrutinise projects (often delaying, but not necessarily derailing them) despite often times offering a strong Return on Investment (ROI) case. Projects that can deliver immediate benefits at low cost are faring relatively better.
Despite this near-term downward pressure on spending from enterprises, the potential for Generative AI has driven significant growth especially for the infrastructure to build AI models. In a year when IT budgets have been constrained by the economic outlook, we believe that Generative AI infrastructure sold into the Enterprise segment is coming at the expense of other IT capital expenditure (Capex) such as servers and storage. We have heard of IT departments delaying refreshes to existing storage and server infrastructure because of the economic conditions and increasing utilisation rates of existing infrastructure. Some enterprises are interested in building their own Large Language Models (LLMs) internally to have control of the data.
As the economic conditions rebound, we expect a sharp reacceleration of enterprise demand, with projects that were delayed restarting, promised new technology deployed, and maintenance Capex for legacy infrastructure resuming.
Over the medium to long term, we believe the new technologies and features being developed by enterprise software companies will increase user engagement and provide opportunity to extract additional revenue from customers because of the productivity gains. While commercial revenue for the technology is just beginning, the interest level has been strong. Accenture on its most recent earnings call said it has been involved in 300 early deals for Generative AI at approximately US$1 million each. Its customers are very interested in using the technology to increase productivity in many business areas including customer service, back office, marketing, sales and accounting, among others. We feel this bodes well for large Generative AI projects in the future.
Ultimately, we believe continued innovation and positive adoption trends are providing a tailwind for the sector. In the meantime, there are technology companies selling their products on a durable subscription basis that drives revenue and cashflow even in uncertain times. Past experience tells us that technology growth rapidly accelerates after a macroeconomic slowdown ends, and sharp corrections in the technology sector have the potential to create attractive investment opportunities for long-term investors.
Michael Stiasny,
Head of UK Equities
Perception, patience and potential opportunities
Over the past 18 months, anyone could have been forgiven for thinking there was only one side to the ‘soft landing’ versus ‘hard landing’ debate in the UK. The economy’s lagging post-COVID recovery has been highly publicised, while the stock market has not hesitated to punish domesticfacing companies. In September, media outlets reflected the national mood by marking the one-year anniversary of the infamous Liz Truss-Kwasi Kwarteng mini-budget, reminding us of the event’s lingering effects on global investor sentiment towards the UK.
Like much of the Western world, the UK may now be approaching a turning point in the inflation cycle, whereby central banks, including the Bank of England, consider pausing interest rate hikes due to softening economic data. Yet, regardless of whether or not the UK eventually enters a recession, there are some reasons for UK equity investors to be cautiously optimistic
Firstly, the UK’s recent economic performance been revised upwards by the Office for National Statistics (ONS) – GDP at the end of 2021 was adjusted to 0.6% above pre-pandemic levels, compared to a previous estimate of 1.2% below8. This means the UK has lost its crown as the worst G7 performer and implies the economy may be more resilient than people have feared. Secondly, as many investors are already aware, even if the UK’s domestic economy does take a turn for the worse, this would not necessarily drive equity market performance.
The UK market was resilient in the third quarter, with the FTSE All Share Index delivering a positive total return of 1.9%, ahead of many other developed market peers. This was driven by the FTSE 100 Index’s oil and gas majors (+2.2%) against a backdrop of tightening supply going into winter and a weaker sterling (around three quarters of FTSE 100 revenues are earned overseas)9. Longer term, we continue to believe the UK market is relatively well placed for a higher interest rate environment. As seen in Figure 7, UK companies’ return on equity (ROE) has been steadily rising, driven by oil companies and banks, reversing a long-term downward trend during the era of ultra-low rates and inflation. Dividend cover also remains strong at 1.76x, which is higher than December 2019’s pre-pandemic level, when the cover was only 1.39x10. This is particularly notable given that around one third of FTSE All Share constituents yield 5% or higher11.
The mid-cap focused FTSE 250 Index has borne the brunt of investor pessimism, delivering a total return of -17.8% versus the FTSE 100 Index total return of 10.5% since the end of 202112. One might argue that these companies have already taken more pain than many of their larger or overseas-listed counterparts, which could potentially mitigate further discounts or even leave room for upside. Indeed, we saw some big revisions in the market’s expectations in the third quarter, with 39 of the 250 constituents delivering total returns of 10% or higher13. The index is also less domestically focused than its reputation would suggest – around half of FTSE 250 company revenues are now derived internationally14.
We are likely to see further swings in sentiment across global equity markets, given the prevailing economic uncertainty, as well as rapidly unfolding political and technological developments. For investors, this is likely to require some patience – however, as always, it is also likely to present potential opportunities.
Our UK portfolios are beginning to find some buying opportunities in sectors perceived as being sensitive to interest rates such as real estate and utilities, and also in selective consumer-exposed stocks from across the market. During the last quarter, some constituents of these sectors have started to discount higher rates for longer and, in specific cases, value is surfacing.
8 Impact of Blue Book 2023 changes on gross domestic product - Office for National Statistics (ons.gov.uk)
9 Refinitiv DataStream, 29 September 2023
10 Financial Times, 3 October 2023
11 Refinitiv DataStream, 29 September 2023
12 Refinitiv DataStream, 29 September 2023
13 Refinitiv DataStream, 29 September 2023
14 M&G Investments, Factset, October 2023
Carl Vine,
Co-Head of Asia Pacific Equities
Notable intra-market return dispersion
Despite the deterioration we witnessed in global equity market sentiment over the course of the third quarter, Japanese equities were relatively resilient versus other major equity markets, notably in yen terms where a modest positive return was achieved. Beneath the surface, however, there was aggressive divergence in return behaviour. Large-cap growth stocks were relatively weak, reflecting global sentiment concerns, whilst mid-size and so-called value stocks performed well.
The differential in performance between growth and value was exceptionally stark in the period. Compared to its Growth sibling, the MSCI Japan Value Index notched up its third biggest quarterly outperformance in three decades, a 2.5 standard deviation event. Further illustrating the point, a ranking of Japanese stocks at the start of the year by their simple price-to-book ratio (PBR) reveals a meaningful subsequent performance gap depending on the starting PBR cohort. For example, the top decile stocks (high PBR) returned an average 3% year to date to the end of September. By comparison the lowest decile (low PBR) returned an average of 45%. The last time we recall such stark performance differential around a single valuation metric like this was at the height of the growth-boom late last decade15.
In terms of fundamentals, June quarter earnings that were reported across July and August came in ahead of expectations and have continued to reflect robust performance from the corporate sector. These results have been, in fairness, flattered by the ongoing weakness in the Japanese yen, a factor that we suspect will be a major determinant of intra-market behaviour in the year ahead. The weakness is looking increasingly at odds with improving economic fundamentals in Japan, particular at a time when growth concerns in the rest of the world are rising.
As for the corporate reform dynamic that excites us so much about the structural outlook for Japanese equities, our engagements with companies continue to improve conviction in our selfhelp-driven earnings story. Boardroom discussions are now increasingly tackling the ‘best-owner’ question. This is to say that companies are increasingly looking across their business portfolios to assess which business lines can drive global leadership positions and which business lines would be better off under the ownership of a different company. This may seem straight-forward from a Western perspective, but this is new behaviour in Japan where excessive diversification is common. We see the foundations being laid for a meaningful uptick in corporate M&A in the years ahead, a key ingredient to the corporate-optimisation project we see unfolding.
Strategy-wise, the third quarter was relatively quiet in terms of activity. We have taken profits here and there, where returns have been strong and redeployed to more compelling opportunities. However, for the most part, we remain intent on keeping portfolio construction tight, with portfolio risk firmly centred around esoteric, company-specific risk. The macroeconomic environment is confusing and style-based returns continue to show fairly wild swings in Japan. We have high conviction in a positive mid-term outlook for the market overall, but we are not certain at all about which style or which sector drives these long-term returns, and in what sequence. As such, we remain focused on building a non-correlated collection of companyspecific prospective-return asymmetries and building portfolios around them that are agnostic to the yen, interest rates, global growth or style risk.
15 Source: Bloomberg, October 2023
Dave Perrett,
Co‐Head of Asia Pacific Equities
Taking advantage of sentiment-driven market volatility
We remain of the opinion that volatile markets driven by macroeconomic concerns can create interesting opportunities for disciplined, bottom-up stock pickers. Such opportunities to add value through stock picking do not typically arise from an ability to forecast the future course of economic events, but rather from being able to spot inconsistencies in market pricing that can be created by periods of volatility. One recent example would be the divergence in valuation between Hong Kong and Taiwanese banks. In recent months, Hong Kong banks have de-rated on the back of concerns surrounding a weak Chinese economy, a global slowdown and the impact of higher interest rates on the economy. Against this backdrop, a number of Taiwanese banks still trade at a premium to book value, while a Hong Kong bellwether like Bank of China Hong Kong (BoC HK) trades at a material discount to book value and on a much lower price/ earnings multiple. The inherent inconsistency is that if future events prove that BoC HK should indeed trade at this distressed level of valuation, then the share prices of Taiwanese banks – whose clients rely on China and global demand for growth – will prove to be very vulnerable.
Another potential source of opportunity during periods of recessionary concerns arises from the tendency for investors to re-visit historic rules of thumb, by buying and selling stocks that respectively performed well or badly during similar periods in the past. This approach can work, but the danger is that it can overlook underlying changes in individual stock or sector fundamentals
One current example is that the market would, typically, view ship building and bulk shipping as cyclical industries, which should be avoided during periods of slow growth. However, given the ongoing energy transition that needs to occur in shipping over the next decade or more, the supply-demand characteristics are more structurally favourable today than they have been for almost 20 years. Certainly the last decade has been tough for ship builders and as a result many have gone bust and global capacity has declined. Currently, the industry is seeing a renaissance tied to the container shipping boom of the last three years (which is now fading) and demand for LNG ships.
Most yards are full to 2025 and, beyond that period, ever tighter environmental standards will require a wholesale rolling replacement of the existing global shipping fleet, as carbon intensive engines are replaced with first LNG, and then methane and potentially hydrogen-driven vessels. All this at a time when ship building capacity has been diminished. We believe the market is overlooking this structural tailwind. As a result, we have sought to take advantage of any selling tied to cyclical fears to grow our exposure in bulk shipping and ship building.
Finally, cyclical concerns, particularly in Asia, can have a tendency to drag down equity market valuations across the board, as investors fear weaker profits. This general rise in equity risk premia can create opportunities to buy companies that have strong structural tailwinds, especially those tied to niche areas of renewable energy and electric vehicle demand. In recent months, we have sought to use any sell-off to increase exposure to companies that we believe to be winners from the trend towards increased adoption of renewable energy sources.
Michael Bourke,
Head of Emerging Market Equities
History never repeats itself, but it does often rhyme
Perhaps Mark Twain would have made a good investor in cyclical companies. Study of the past has typically helped analysts in thinking about how economic cycles vary and affect the earnings power of individual companies in their respective sectors. That analysis is more challenging currently, given the disruption wrought by COVID in many economic sectors. Semiconductors and chemicals, for example, have been in recessionary territory for well over a year now with year-onyear revenue declines. The auto sector underwent a severe de-stocking globally in the immediate aftermath of COVID and, arguably, inventories remain well below normalised levels. The challenge for investors, therefore, is how to unpick that dynamic from the background rhythm of the macroeconomic cycle. As ever, the value we, as active investors, seek to add is not in speculating on how the economy may evolve but to decipher where the earnings power of a company sits relative to their cyclical potential and the market’s current valuation versus our estimate of fair value.
In Emerging Markets (EMs), we also have to account for the variation in cycles. Not all EMs are in the same place. China continues to beguile and challenge investors with mixed evidence of a stabilisation offered by recent Purchasing Managers’ Indices (PMI) and other housing-related data, while India and Indonesia offer comparatively higher and more resilient growth. In Latin America (Latam), the early embrace of higher rates has insulated economies from inflation passthrough and currencies have warmed to the carry advantage offered by local rates vis-a-vis the US dollar. That has come at a cost, though, of sluggish domestic demand. As the market waits with baited breath for the Federal Reserve to pronounce an end to this dollar rate cycle, so Latam central banks wait to press the trigger on lowering rates from here (Mexico is yet to begin rate cuts and, while Brazil has started cuts, concerns regarding recession in the US may arguably help the country move faster in reducing rates).
That cyclical variation between different EMs, the degree of sensitivity to US dollar rates (and associated risk of US recession), as well as the market’s interpretation of those conditions, provide opportunities for active EM investors. We have been adding to positions in Brazil, while tempering exposure to Mexico, for example. We continue to see Brazil as relatively insulated from US economic conditions with the potential for a stronger consumer recovery as rates fall.
Elsewhere, South Africa has undergone a torrid period with intermittent power outages (the so-called load-shedding) shredding domestic growth. Companies there are heroically resilient though; we have turned incrementally positive and been adding to positions, given the attractive valuations on offer.
At a sector level, we continue to see opportunities across the technology and financial sectors within Asia, taking advantage of the de-rating of insurance companies, in particular, on excessive fears of exposure to China real estate woes. The technology sector, especially semiconductor companies therein, have weathered a lot of earnings pain over the past 12 months. In the third quarter, we saw NAND prices move materially – spot memory prices were up 25% from their end of June lows. For both DRAM16 and NAND17, we are seeing expectations for memory prices in the fourth quarter moving materially higher from current levels, and we are hearing from companies that contract pricing is 10-20% higher.
More generally, we believe the inherent diversification available within EM equities affords us the opportunity to diversify our sector and geographic exposures across cycles.
16 Dynamic Random Access Memory (DRAM) is a volatile memory that stores data temporarily when a device is on – short-term memory
17 NAND is a non-volatile long-term memory that allows devices and applications to store large datasets permanently even when the device is off.
John William Olsen,
Head of Impact Equities
Where’s that recession I was promised?
I recently read a headline akin to: “Where’s that recession I was promised?”. We would obviously all rather be without those miserable slumps in the economy, but many believed that one was coming – sooner rather than later.
But what now?
The AI optimism and a strong jobs market seem to have led to a degree of complacency amongst investors. Cyclical sectors have recovered alongside the tech companies, and they have outperformed the more defensive sectors over the last 12 months. The probability of a recession is, however, still not negligible as high interest rates and inflation really start to bite. The challenging effect of higher mortgage rates and funding costs has now been swiftly reflected in some areas of the market. Renewable energy stock prices for companies involved in rooftop solar and offshore wind, for example, have taken a serious hit as the fundamental effects of higher rates have begun to impact the cost of debt, increasing project costs for renewable energy and extending the payback periods for rooftop solar projects. It may just be the early signs of worse things to come, but at least the fears of rising or persistently high interest rates are now being better reflected in valuations in this part of the market.
Defensive stocks such as those in the healthcare sector have lagged the wider market as high cash flow yields are challenged by alternative returns on long-dated bonds. We do not believe this would be the expected trend if we were on the brink of a recession.
If, or when, the economy turns sour is yet to be determined, but it seems that higher rates are now being priced in more efficiently in certain areas than the possible future effects of those rates on consumption and the broader economy. We continue to look towards areas of the market where we find a good margin of safety, and where long-term growth might be being overshadowed by shorter-term worries. Healthcare and renewables are interesting areas to look for relative value, in our view.
David Romani,
Deputy Fund Manager, Convertibles
Soft, hard or no landing, debt falls due
Maybe the economy will continue to levitate forever, maybe gravity will be restored, but we believe convertible bond issuance will remain of heightened interest to corporates and investors alike.
Regardless of the vagaries of the economic cycle, higher financing costs and looming debt maturities in 2024-26 across all types of issuers should force corporates to issue new debt and contemplate convertible bonds (CBs) as a cheaper alternative to straight bonds. Debt needs to be refinanced, typically 12 to 18 months and often up to 24 months before maturity. Hence, 2025-26 maturities have already started to come to the market and their importance will only grow during the next two years.
Should higher-for-longer inflation and interest rates prevail, the incentives for companies to save on interest expense by issuing lower coupon CBs will be even more powerful. Should a recession materialise, lower rates will reduce these incentives, but earnings declines, higher leverage and impending maturities will still likely force some firms to resort to CBs for financial relief.
The passing of time favours the issuance of CBs
Until recently, many firms held off from issuing debt, reasoning that rates were peaking and would come back down later. Now that ‘higher for longer’ is keeping hold, they have no option but to issue at higher rates.
CBs are shorter-dated when compared to other fixed income instruments, as seen in the chart below. They currently have an average maturity of 3.4 years and with an even shorter (less than 3 years) expected life18.
Due to their shorter maturities, more than 50% of global convertible bonds (ca. US$185 billion) and 35% of global high yield bonds (ca. US$620 billion) will mature in 2025-26. For global non-financial investment grade bonds, maturities are less concentrated in 2025-26, although, being a much larger market, they exceed US$1.6 trillion.
Changes to accounting standards in the US, reducing the interest expense recognised for CBs (boosting earnings versus straight bonds) is also providing a tailwind for CB adoption.
Convert migration
To assess the potential for having straight debt replaced by CBs for the reasons outlined, we conservatively assume that 10% of global high yield 2025-26 maturities migrate to the convertible market. Further, we also assume that 5% of the global BBB-rated investment grade, capital-intensive sectors19 2025-26 maturities are refinanced with converts. Together this would amount to a sizeable US$87 billion contribution, or nearly 25% of the existing convertible market. This compares favourably with a ‘typical’ level of CB issuance of US$80-100 billion per annum.
We expect the combined drivers outlined above to increase CB market size and variety over the medium term, creating a wider opportunity set. And, in an environment of greater financing needs, and more constraints for issuers, we expect increasingly advantageous terms for investors. We are already seeing a shift in pricing power towards providers of capital, with higher coupons and lower premiums, and we also see potential for better dividend protection and less aggressive structures.
We welcome the breadth of opportunity that greater CB issuance presents but, with issuers of varying quality entering the market, detailed fundamental analysis, discrimination and careful selection becomes increasingly important.