HT Bureau
GUWAHATI, Nov 8: Franklin Templeton’s APAC Investor Forum 2023, a hybrid event held in Hong Kong, brought together a panel of investment experts, including Chief Investment Officers (CIOs) and Portfolio Managers from various Specialist Investment Management teams. The forum served as a platform for discussing the changing investment landscape influenced by geopolitical shifts, technological innovations, and evolving demographics, offering valuable insights into investment perspectives in this new environment. Commenting on the risk of recession and investment opportunities in 2024, Stephen Dover, Chief Market Strategist and Head of the Franklin Templeton Institute, stated, “While the likelihood of a mild recession in the U.S. remains high, emerging markets, in particular Asia, may be more resilient. A weakening US dollar should support emerging markets, particularly those that will benefit from shifting supply chain dynamics. Lower debt levels, inflation, interest rates, and solid fiscal policy puts many Asian countries in a more favourable position. We see the greatest opportunities in Japan which is seeing a reversal of multi decade trends that are now showing positive momentum. We also see opportunities in Southern Asia. From an asset class perspective, fixed income globally is attractive as interest rates are at 10-year highs and are likely near peak levels in most regions. In terms of equities, we do not think U.S. earnings expectations are priced for an earnings slowdown. We prefer equity markets outside of the US.”
Dr Sonal Desai, chief investment officer, Franklin Templeton Fixed Income, discussed the inflation and rates outlook, suggesting that peak rates might be approaching, and markets were beginning to factor in the Federal Reserve’s intentions for the coming quarters. Dr. Desai pointed out that markets might be overestimating the likelihood of rate cuts in the next year and outlined several factors contributing to this, including supply and demand issues, as well as the stickiness of inflation. She further noted that the market was pricing in the return of a healthier level of term premia and a real rate closer to pre-global financial crisis averages, which was pushing long-term rates higher. As a result, Dr. Desai recommended investors explore opportunities in fixed income as a reliable diversifier to equities.
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Franklin Templeton’s APAC Investor Forum provided valuable insights into the ever-evolving investment landscape, offering a comprehensive perspective on recession risks, inflation, rates outlook, and opportunities in the global investment arena.
