Top Research Picks for September 2023
In the newest edition of our "Investment Research Digest" we look at the latest interest rate decisions by the US Fed and the ECB, as well as the investment opportunities in Emerging Markets.
Here are our top research picks for the month of September:
Key US Fed rate remains unchanged
The US Fed's decision to keep its benchmark interest rate unchanged after 11 hikes was in line with expectations. But where will the Fed go from there? Read more
“While the Fed kept a lot the same, holding the target range for rates steady and keeping the longer-term rate at 2.5%, there was a significant change. The Fed removed some rate cuts next year in its dot plot, so markets are correctly reading a less dovish outlook with rates that are higher for longer,” comments Jack McIntyre, Portfolio Manager at Brandywine Global.
Calls for an interest rate pause remain unheard
The European Central Bank (ECB) again increased its key interest rate by 25 basis points to 4.5% to check inflation. But will this support a recovery? Read more
“The decision comes despite very weak activity data in recent months. We think that with its rate hikes, the ECB is heading into a recession that is probably already underway. The latest hike could make this downturn deeper and the recovery slower,” says Felix Feather, Economic Analyst at Abrdn.
Navigating the diversity of Emerging Markets
When it comes to emerging markets, equity investors shouldn’t just restrict themselves to Emerging Asia, says Eastspring Investments. Latin America, for instance, is one region with promising companies and sectors. Read more
“The higher market volatility of some of the emerging regions outside Asia lends well to an investment process which looks beyond the noise and is fundamentally focused,” opines Samuel Bentley, Client Portfolio Manager, Equities at Eastspring Investments.
UBS Asset Management highlights that EM corporate debt frequently faces misunderstanding, marked by outdated perceptions that do not accurately capture its actual characteristics. Read more
“EM corporate debt is now largely an investment-grade market. Strong fundamentals, attractive valuation, and improving secondary market trading volumes have also led to a broadening of the investor base,” as per UBS AM.
Asia: India and Indonesia shine
As the geopolitical situation in Asia is changing and China is experiencing economic challenges, other players such as India and Indonesia emerge on the investment stage, highlights Nikko Asset Management. Read more
“After a challenging year in economic growth terms, compared to initially heightened expectations, a ‘de-risking’ of supply chains away from China is increasingly evident, with investment capital being reallocated into India and ASEAN countries such as Indonesia,” writes Nikko AM.
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