Recessions triggered by external shocks are usually short-lived
Chief Investment Officer Gerold Permoser was particularly impressed with the speed of the market recovery. “The markets bounced back more quickly and massively than during the Lehman crisis.” Recessions triggered by external shocks are usually short-lived because the economy as such is healthy. And in this case, the economy behaved exemplarily. The stimulus package in the USA was the turning point. Governments and central banks reacted much faster than in 2008/2009. Therefore, the focus of the coming months will be on the interplay between fiscal and monetary policy. Real interest rates are extremely low at the moment, but even in the event of a slight increase in inflation, real yields would continue to fall in 2021. This stimulates the economy and provides the governments with room for manoeuvre.
Permoser: 2021 will be a “year of recovery
The November rally gave us a short preview of 2021, the Year of the Taurus, i.e. a year of recovery with improving political stability, no tax hikes, and a more effective fight against the pandemic. There should be at least three safe vaccines by the beginning of 2021. The UK has already started to roll out its vaccination programme. Permoser: “The burden of COVID is on the decline, the political situation is more favourable than a year ago, and the economic recovery is taking hold,” says Permoser.
Erste AM: equities remain top of the list – “laggards” may catch up
Phases of economic recovery are good for the equity markets. This asset class therefore remains on top of the list for Erste AM in 2021. We might see sector rotation on the market: cyclicals may outperform other sectors. The focus of mixed funds is on European equities and sectors with a performance gap to close, i.e. banks, energy, and the industrial sector. Here, Europe is in a better position than the USA. If cyclicals were to end up outperforming the market, this would also be good news for Austrian equities, as the ATX index contains numerous of those companies, explains Permoser. In addition to Europe, the Asian stock exchanges (including Japan) also offer good investment opportunities.
In the fixed income sector, Erste AM relies on European and US corporate bonds and emerging markets government and corporate bonds, which have also seen a good performance this year. Euro government bonds and US Treasuries, on the other hand, have largely been taken out of the mixed funds as they are currently not attractive.
In addition to cyclicals, Erste AM regards funds that focus on megatrends and sustainable investment funds as attractive due to the result of the US election and upcoming regulations to fight climate change.
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