Specialist in Asia Pacific, Japan, China, India and South East Asia and Global Emerging Market equities.
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Stewart Investors manage investment portfolios on behalf of our clients over the long term and have held shares in some companies for over 20 years. They launched their first investment strategy in 1988.
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We are entering a new era. The year 2024 will be unpredictable and clouded by many uncertainties. It will be marked by geopolitical risks, the ongoing taming of the inflation beast, and how the US Presidential election will impact markets. In this structurally different world, where higher interest rates define markets, the consensus among many investors is that volatility will continue to reign supreme.
Against this backdrop, in our view active investing will take centre stage as investors seek to capitalise on opportunities to generate returns. Our investments teams are navigating the course with caution, actively uncovering pockets of opportunity, as they position portfolios for potential upside gains while managing downside risks.
First Sentier Investors’ asset class experts share their views on how they’re thinking about 2024.
Asian Fixed Income
Asian Fixed Income
Global Listed Infrastructure
Responsible Investment
The inflation conundrum
Throughout 2023, central banks faced tough challenges in taming inflation. While many predicted a recession, the reality is that markets may be in for a softer landing and how central banks respond is unclear.
Providing a perspective on Asia, Nigel Foo, Head of Asia Fixed Income said, “There are clear signs that inflation will continue trending lower unless food and energy inflation causes a spike. However, central banks will have more flexibility to pause rate hikes or cut rates to spur growth, should the need arise.”
“Despite short-term challenges in China, our view is that the Chinese government will remain steadfast in seeing its policies through and to push the economy into achieving higher-quality growth.”
Bonds back as the great diversifier
“We believe fixed income now measures up more favourably against other asset classes,” said Foo.
“The income component of Asian Investment Grade Credits have strong yields relative to the last few years, making it more appealing for investors who were previously grappling with historically low coupons. We believe these will continue to perform well next year as fundamentals remain sound. Similarly, opportunities in Asian High Yield look promising as distressed names are now in more advanced stages of restructuring. We expect upsides from such recoveries to be attractive from a risk-reward perspective.”
Infrastructure: a story of structural growth
Peter Meany, Head of Global Listed Infrastructure, said the outlook for the sector was positive, “Earnings growth for critical infrastructure assets are likely to be underpinned by several growth drivers in 2024 and beyond. We are optimistic about the substantial investment opportunities associated with the energy transition but there are also themes like solving for urban congestion, and digitalisation, which we expect will add value long into the future.”
“Currently, we see real value in sectors like US utilities and toll roads, where the market has underestimated the potential of these assets. We see opportunities to buy into long-term structural themes at an attractive price point and with many governments hamstrung by debt following the pandemic, we expect that the private sector will be called upon to drive further investment in this area in the years ahead,” Meany said.
These structural growth drivers extend to direct infrastructure.
A convergence of responsible investment issues
“We are increasingly seeing how responsible investment areas are converging,” said Kate Turner, Global Head of Responsible Investment.
“We cannot look at climate change as a standalone issue. As droughts, floods and other extreme weather batter the globe, thousands of the poorest populations are being forced to flee their homes and livelihoods. A key risk for displaced people is falling victim to modern slavery situations such as forced labour. Human rights are also bound up in the decarbonisation of the global economy.”
“The transition to a low-carbon economy is urgent and important, but we must also ensure it is a just transition. Governments, companies and investors must aim to ensure there is decent and fair work for everyone, as we decarbonise the world,” Turner said.
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