Investing for tomorrow

Portfolios managed by Candriam have no exposure to any Credit Suisse security, OTC exposure or stock-lending exposure.

The year of 2022 proved to be one of the most challenging and volatile for emerging market (EM) equities.

The macro environment in 2023 is likely to remain volatile for emerging market debt, until global disinflation trends gather momentum and central banks shift to an accommodative stance.

After 2022, an “annus horribilis” for many investors, we believe that bond repricing now offers many opportunities.

Last week, sitting comfortably on my sofa, I turned on the TV and stumbled upon the testimony of the Iranian actress Golshifteh Farahani. I felt quite helpless in front of so much suffering and injustice.

“Nowhere has it been considered a disastrous indirect tax is created by constantly rising inflation, nor what the results are.” (Welche vernichtende indirekte Steuer zudem in der fortschreitenden Papiergeldinflation liegt, wird übrigens an keiner Stelle berücksichtigt – Rudolf Havenstein, 1922

Despite a fairly significant rally beginning in October, European equity markets, battered by major outflows since the start of the crisis in Ukraine, recorded a correction over the year 2022 (-9.5%). Although European equities finished the year on a relative outperformance compared with the United States (-13.4%) and emerging markets (-15.1%)1, the year was still a source of concern for investors, who are now asking questions about what may arise in 2023.

Sustainable Finance Disclosures Regulation (SFDR), mandatory ESG disclosure obligations, was introduced by the European Union to improve transparency in the market for sustainable investment.

We have started 2023 with a preference for equities over bonds, as our investment strategy turned more constructive on attractive price levels in October.

2022 was a very challenging year for traditional asset allocations, with the active repricing of risk premiums taking centre stage.

Market exuberance continued in December and through the first days of January, as risky assets posted a strong performance, once again on the back of signs of weakening inflation and the hope that central banks would strike a less hawkish tone.

European equity markets registered a significant rebound from the previous month. This was mainly driven by China’s decision to ease its zero COVID-19 policy.