MIFL Sees Sustainable Investment Opportunities In 2024

European investment house Mediolanum International Funds Limited has just released its mid-year global market outlook for 2024, analysing the economic landscape and investment opportunities for the year ahead.

Ireland-based
Mediolanum International Funds Limited
(MIFL) anticipates a “soft landing” for economies, with
stocks set to rally, as global markets benefit from a lower
inflationary environment in the second half of the year.
However, the investment house believes that the
higher-for-longer interest rate environment has implications for
both equity and bond markets, affecting growth companies and bond
yield.

Despite the rate raising cycle of 2023, MIFL highlighted how
economies have shown resilience, leading to an equity rally and
moderate volatility in bond markets. However, a mixture of
conflict, the US late-cycle economy, high valuations and
political uncertainty ahead, especially around the US elections,
mean that investors should consider a balanced approach to their
asset allocation, MIFL said in a note.

The investment house believes that emerging markets, led by India
and China, will drive global growth in 2024, presenting
attractive investment opportunities.

The global economy is forecasted to maintain a growth rate of 2.6
per cent this year, with emerging markets, particularly India and
China, leading the way. “This improved growth is positive news
for equity investors, as ultimately equity returns are highly
correlated to economic growth over the long term,” the firm said
in a statement.

Growth companies in the tech sector lead the equity rally,
navigating the higher interest rate environment. “However there
are doubts that this will continue and is a reason to diversify
exposure to reduce risk,” the firm added.

While more volatility is expected for equities in the second half
of 2024, if central banks can engineer a “soft landing” then MIFL
believes it will set investors up for better opportunities. An
ailing Europe is earlier in the economic cycle than the US, which
has enjoyed strong growth over the past year but may be beginning
to show signs of tiredness, with the difference in their
respective growth rates likely to narrow, MIFL continued.

“With interest rates likely to stay higher for longer and
emerging markets like India and China driving global growth,
investors face both opportunities and challenges. As we approach
the US election in November, we anticipate heightened uncertainty
and increased market volatility, driven by a mix of geopolitical
conflict, the late-cycle US economy, and high valuations,” Brian
O’Reilly at MIFL said. “While economic growth and corporate
profitability are in relatively good health, investors should
focus on building portfolios around a strong core, adding risk
selectively based on personal goals and circumstances,” he added.

“We see opportunities in longer-term bonds, a diversified
approach to equities, and sustainable investment, yet the
unpredictable political landscape requires careful navigation,”
O’Reilly continued.

MIFL highlighted that emerging markets are already cutting
interest rates and improved governance and transparency in some
emerging markets makes bonds compelling. “The sustainability
transition, particularly in real estate, electric vehicles, and
green bonds, continues to offer promising investment avenues,”
MIFL added. The investment house recently launched two new
multi-manager funds, adding to its ESG product range. See more
commentary
here.

O’Reilly believes that informed, diversified strategies, coupled
with active management, will enable investors to separate the
wheat from the chaff and thrive in this environment.