This note provides an update on the current opportunity set in infrastructure investments and highlights some of our preferred areas in the private space, including energy transition and digital infrastructure.
With the global economy showing signs of cooling and Chinese economic momentum remaining weak, the outlook for Asian markets is increasingly mixed.
In this edition of VantagePoint, we find that consumers, corporations, and the banking sector remain in good shape, and while US/global economic growth is likely to slow in the second half of 2024 relative to the first, we expect it will remain positive. Although market concentration risk is elevated, given its focus on highly profitable AI-related tech stocks, we would seek to be measured about diversifying such risks.
No, Federal Reserve rate cuts alone are unlikely to trigger sustained outperformance for Chinese equities.
No, not right now. We continue to believe investors should: (1) keep equity allocations aligned with broad policy targets; (2) maintain modest overweights in less expensive areas within equities, such as developed markets value and small caps; and (3) maintain a modest overweight in long US Treasury securities within bond portfolios.
Most risk assets enjoyed strong returns in fiscal year ended June 2024. Developed markets equities led on better-than-expected economic data and the anticipation that central banks would begin easing monetary policies.
Our outlook for New Zealand is mixed in 2024. We expect economic growth and equity market to remain muted. In contrast, we remain positive on New Zealand government bonds.
UK GDP fell by more than expected in fourth quarter 2023, which pushed the country into a technical recession. It joined fellow G7 economy, Japan, which had earlier undershot expectations and delivered a second consecutive quarter of negative growth.
Risk assets enjoyed mostly positive returns in CY 2023. Developed markets equities led as fears over the severity of a possible recession moderated and inflation declined.
Yes, US-China geopolitical realities are already having an impact on trade and investment flows within Asia. China will remain an important destination for investor capital, but the shift in capital flows, alongside positive domestic structural developments in other parts of Asia, create investment opportunities beyond China that deserve a closer look.