Outlook 2024

Executive summary

The year 2024 will be marked by the continued normalization of monetary policy around the world, heightened geopolitical tensions and uncertainty about the decline in inflation.

Rising interest rates and bond yields have fundamentally changed the basis for all investment decisions. This paradigm shift will favour bond investors, who will benefit from higher expected returns, but will further weaken highly indebted actors, especially governments.

Although interest rates have peaked, structural inflationary pressures, such as rising protectionism or the energy transition, will certainly increase the risk of higher inflation than we have seen in recent decades.

As we enter 2024, undoubtedly a year of transformative change, investors’ agility will be an asset in seizing the opportunities that volatile markets will offer in the quest not only for wealth preservation but also for real growth.

Economic Outlook

Slower growth ahead but still slightly above potential

US growth to outperform developed peers

China growth upgraded to 4.6% in 2024

Headline inflation falls in all G10 economies except Japan

Core inflation has also fallen, but at a slower pace

Developed central banks have reached the end of their hiking cycle

Monetary policy normalization underway in Japan

 

Best Investment Opportunities

High nominal and real yields provide a means of locking in cash flows

Front end of curve attractive due to flat yield curve beyond 3 years

Interest rate cuts make cash less appealing

Emerging market corporate debt offers attractive carry

Yields of around 8% for high yield are rare and followed by double-digit returns

European equities set to outperform US equities

Small caps or equal-weighted index trading at significant discount to large caps

Favourable risk/reward profile for Chinese equities

 

Key Risks

Rising inflation could delay central bank rate cuts

US consumer spending slows sharply

China’s economic woes persist

Unchecked geopolitical tensions and conflicts

 

Table of contents

  • OUTLOOK 2024: EXECUTIVE SUMMARY
  • A BRIEF REVIEW OF 2023
  • RESILIENT GLOBAL ECONOMY IN 2023 WITH DIVERGENCES
  • OUTLOOK FOR 2024
  • INVESTMENT CONVICTIONS FOR 2024
  • ASSET CLASS VIEWS

Download the Outlook 2024