December 2020   | For professional investors only

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For professional investors

Early Christmas gifts to support year-end rally

As we approach year-end, markets can count on two pieces of news to propel some optimism: the Biden victory in the US elections without a real Blue wave and the “almost available” vaccine even if its efficient roll out remains a challenge.

With a cyclical view, entering 2021, we see the recovery phase approaching, though still within a regime of low rates and abundant liquidity.

– This, in our view, will support risky assets and equities in particular with a rotation of themes, looking for cyclical opportunities and a recovery in the unloved value sectors.

Monthly convictions

Play the EM recovery 

In a still uncertain virus and economic cycle, certain Asian economies are emerging as the most resilient, having been able to effectively manage their outbreaks. So far, China has been the only country to recover to its pre-crisis GDP level.

The outlook of EM countries in LatAm should also improve in the coming months as the virus cycle is improving in this area and as LatAm should benefit from a better environment for commodities.

EM Equities

The Biden victory removes some overhang on EM equities, given expectations of stable foreign and trade policy and a less confrontational approach towards relations with China. The latter, along with markets such as South Korea and Latin America (commodity push), would gain from a tilt towards cyclicality. Overall, the emerging world would benefit from an improving growth environment in China and a still weak USD.


0.20% OGC* 


0.25% OGC* 


0.20% OGC*

Add cyclicality to your portfolio 

In a phase of mild recovery and earnings re-acceleration in the coming months investors should add exposure to cyclicals stocks. As pro-cyclical markets, EU and Japan should be among the first to bounce back in the recovery.

European Equities

In Europe, concerns on the impact of the second lockdowns are balanced by expectations of continued stimulus and positive newsflow from vaccine deployment. Market distortions may lead to a rotation into value as the growth vs value premium is at extreme levels while a rebound in manufacturing may support the cyclical components of the economy.


0.18% OGC*


0.15% OGC*


0.23% OGC*

Japanese Equities

Japan is one of the most cyclical markets, with the biggest weighting in industrials. A shift towards cyclicality should benefit export-oriented Japanese markets which have been able to withstand the second wave relatively well. Japan should also benefit from its close trade links with China, which is a key destination for Japanese exports and is likely to drive global growth.


0.18% OGC* 


0.20% OGC*


0.05% OGC*

Gold: Easing central banks & economic uncertainty remain powerful drivers

Gold is the asset benefiting the most from the new paradigm of monetary policy. Rising prices in 2020 have been accompanied by central bank balance sheet expansion, indicating a strong role of the latter and low real rates in pushing up the precious metal.

Precious metals: Gold

The most likely scenario is for ultra-dovish central banks in 2021. Such an environment should help real rates to stay close to current levels, which could lead gold to drift higher. The weak dollar, a fragile recovery and the relatively strong CNY are other supportive factors.

For all the above reasons, we reiterate our call for having structural gold exposure and not just considering it for hedging purposes.


0.15% TER**

Constructive on IG credit and US inflation

We believe the positive momentum linked to US elections outcome and positive news on the vaccine front should continue in the near term, particularly in credit, on the back of expectations of (uneven) growth and continuous monetary support.

Credit continue to offer extra return in an income-starved world where negative yielding debt is rising again. 

Euro Investment Grade Corporate

Although credit spreads have tightened considerably since March, we remain constructive for the time being in light of the demand for carry and QE support. We favour EUR IG over US IG, due to the combination of attractive valuations, ECB purchasing programmes, and lower leverage in Europe than in the US. Within EUR IG credit, the BBB segment can offer some extra yield in a carry strategy, with still limited default risk, but investors should balance their search for yield with buying quality assets.


0.16% OGC*


0.05% OGC*


0.20% OGC*

 From a  global fixed income perspective, we marginally downgraded our duration view to become slightly cautious overall but remain positive on US.

– We think prospects for US curve flattening are now weak, in light of positive vaccines news and a mildly supportive growth environment. Our positive view on US inflation remains.

US inflation

On US inflation, we maintain our constructive view amid the Fed’s average inflation targeting, the ultra low rates monetary landscape and debt monetisation tendencies. Covid -19 vaccine availability may support the reopening of economies, though still within low rates and abundant liquidity Regime, suggesting upward pressure on inflation.


0.16% OGC*


0.16% OGC*

*Ongoing charges - annual, all taxes included. For Amundi ETF funds, the ongoing charges correspond to the Total Expense Ratio. The ongoing charges represent the charges taken from the fund over a year. When the fund has not closed its accounts for the first time, the ongoing charges are estimated. It compares the annual total management and operating costs (all taxes included) charged to a fund against the value of that fund’s assets. Transaction cost and commissions may occur when trading ETFs.
**The TER is a measure that compares the annual total management and operating costs (all taxes included) charged to a ETC against the value of that ETC’s assets. Transaction cost and commissions may occur when trading ETCs.


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