Macro and micro fundamentals remain positive for equities, says Marco Piersimoni, head of strategy a...
Macro and micro fundamentals remain positive for equities, says Marco Piersimoni, head of strategy at Credit Agricole Asset Management. On a macro level, global growth continues apace. "Asia, Europe and Japan are contributing to growth much more than they did in the last decade, the US less. This is a better situation as global growth is now more balanced and is being maintained by a complex of economies. In terms of the micro environment, we are not close to the excesses of the 90s where companies were overleveraging balance sheets and investing too much. Instead companies have healthy balance sheets."
As a consequence, Piersimoni is overweight equities and favours emerging market equities, with an emphasis on Asia and Latin America. He argues that although price appreciation of these stocks has been impressive, the underlying fundamentals and profit growth have been even more so.
Piersimoni is also keen on the oil and energy sector. It is a view shared by Nils Taube, managing director of Nils Taube Investments. "30% of our portfolio is invested in oil and energy, much more than the index," says Taube.
Taube is also overweight Australian agricultural and food stocks, his case being that roughly 50% of the world's population, including China, the Indian subcontinent and Indonesia, live within in a relatively short distance of Australia. He says: "As countries become richer, they consume more meat so that is one of our main focuses, alongside metals, in Australia."
Taube's other main focus is Japan. "We have holdings in two or three small banks and a water distillery company. There are also a lot of stocks with international markets. We are already doing quite well in Japan and as the yen goes up, we will have a double whammy there," he says.
Taube describes the bond market as "pretty miserable" and has 15-20% of his portfolio in cash instead. Piersimoni is less pessimistic and says: "Credit markets have been very expensive but after the recent correction, we now see opportunities, especially in Europe. We have a stance which is broadly neutral and we think long-term bonds are fair value."
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