Capital Group
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Published 19-9-2023

Asset Category

Kirstie Spence: three exciting things about EMD

In this short video, Kirstie Spence, fixed income portfolio manager, shares her outlook for emerging market debt and outlines the three things currently exciting her about the asset class.

Published 8-8-2023

Asset Category

Will India be the breakout emerging market this decade?

India's significance as a rising global power came to light with Prime Minister Narendra Modi's recent visit to the United States, where he addressed Congress, met with high-profile business leaders and dined at the White House. From our recent travels around the country, we believe indications are pointing in the right direction: Corporate confidence is high, the economy is expanding at a decent clip and technological innovation is leading to new areas of growth.

For a democracy of its size, the country has seen relative political stability over the past 10 years, allowing economic development to be a top priority. While political instability and market volatility may increase in advance of general elections next year, we believe that India is poised for a period of secular growth, fuelled by significant expansion in direct and fixed asset investment.

In this paper, we address some of the key aspects that make India appealing compared with other emerging markets.

Published 1-6-2023

Asset Category

What will you do with extra cash as the Fed changes course?

With the Federal Reserve’s (Fed) rate hikes potentially over, short-term bonds are a compelling alternative to cash and cash-like investments.

What are the current prospects for this end of the fixed income market as the Fed changes course?

Published 26-4-2023

Asset Category

What does the ‘next normal’ mean for fixed income?

After three years of COVID, roller-coaster economies, inflation and central banks’ fight against an uncertain future, it appears we may finally return to the world we used to know. The “new normal” – where rates are low, volatility subdued, and investors are willing to take on more risk – could yet return. But can it be so simple? After all the upheaval, are we really returning to the pre-COVID era?

Published 31-3-2023

Asset Category

How vulnerable is EM debt to volatility spillovers?

At the beginning of the year, the three major factors driving emerging market (EM) debt were US financial conditions, the dollar and global growth; all three look likely to have been changed by the current shock to the banking sector. What is the impact of the Fed appearing to temper its hawkish tone?

Published 27-2-2023

Market & Macro

Inflation or financial stability?

After spending over a decade trying to generate inflation, central banks are today confronted with the highest increases in prices since the 1970s. The return of inflation brings with it an unwelcome dilemma; combat inflation or prioritise financial stability. What are the implications of these policies for investors in, for instance, credit, high yield or EMD? We describe four possible macro scenarios and the associated opportunities and risks for bond investors.

Published 16-2-2023

Asset Management

Are 60-40 portfolios set for a comeback?

60/40 portfolios have certainly seen better times, having recorded their worst year since 2008. A turbulent 2022, however, could be the precursor for a brighter future, especially for investors looking to balance long-term growth, conservation of principal and current income. In this paper, we highlight three factors that could potentially drive a comeback for 60/40 portfolios in 2023 and beyond.

Published 19-1-2023

Market & Macro

The economy in 2023: Where we differ from market consensus

At the moment, markets appear to be crystallising around a hopeful outlook for 2023. Asset prices suggest inflation will begin to subside quickly, the US Federal Reserve will become less hawkish and global growth will not be that much weaker than in 2022. However, monetary policy is fluid, geopolitical uncertainty is high, and strong labour markets are being offset by weakness in housing and other areas. Together, this allows for a range of possible outcomes.

Here are four contrarian scenarios in which our economists think current market consensus, as reflected in asset prices, may not be the most probable outcome.

Published 21-12-2022

Market & Macro

Outlook 2023: a new reality for investors

There’s a new reality taking shape in global markets. Several seismic shifts have taken place that will likely define the next decade of investing. Will new equity market leaders emerge and where are the opportunities for bonds after such a tough year?

Read our 2023 outlook or view the recording of our recent outlook webinar.

Published 6-12-2022

Market & Macro

Emerging Market Debt outlook 2023: Protection in volatile conditions

The global macroeconomic backdrop has been the main driver of emerging market debt returns in 2022 and this looks set to continue in 2023. There are three main driving forces within this: tighter financial conditions led by the US, a stronger US dollar and weak global growth.

Two of Capital Group's portfolio managers look at EMD's prospects for the next year, weighting the opportunities and challenges.

Published 17-11-2022

Market & Macro

New reality for investors: 5 big trends changing markets:

Many investors are expecting a return to normal after inflation subsides and central banks stop raising rates. But Portfolio Manager Jody Jonsson believes the world is undergoing significant changes and that investors will need to reset their expectations about how a typical investing environment will look.

Here are five seismic shifts happening in economies and markets right now, as well as the long-term investment implications of each.

Published 3-11-2022

Asset Management

Clean hydrogen: Opportunities beyond the hype

- Blue and green hydrogen are poised to play a major role in decarbonising heavy industry, supporting electrification and enabling more sustainable economic growth.

- The US Inflation Reduction Act is a game-changer that should unleash a wave of capital expenditure, lifting supply and demand for clean hydrogen.

- The pace of decarbonisation will be dependent on upgrading power grids and other advances. Low-cost renewable energy will be vital for clean hydrogen solutions to become cost-competitive with fossil fuels.

- Disruption among steel producers, commercial vehicles and generally across the energy complex are three areas of potential fertile ground for selective investors who can take a long-term view.

Published 4-10-2022

Asset Management

Braving bear markets: 5 lessons from seasoned investors

With stock markets around the world entering bear territory, we showcase lessons from seasoned Capital Group investors on how to cope with difficult conditions.

Published 1-9-2022

Asset Category

4 reasons health care could lead the next bull market:

Amid the storm of market volatility in the first half of 2022, health care was among the few areas that offered investors some shelter.

Two Capital Group investment professionals look at how health care companies could lead the next bull market.

Published 10-8-2022

Market & Macro

Is the US economy in recession or not? That’s the question on the minds of many investors as US gross domestic product (GDP) declined for two consecutive quarters in the first half of the year, a commonly cited definition of recession.

Three Capital Group investment professionals discuss their outlook for the US economy and markets.

Published 1-8-2022

Asset Category

Capital Group: Q2 Fixed income perspectives

In this quarterly publication from the fixed income team, we discuss:

• Fed policy and the global economy
• Why inflation is likely to stick around
• If now is the time to consider corporates
• Key risks in European fixed income markets
• Why high yield bonds are becoming more attractive

Published 20-6-2022

Market & Macro

A focus on inflation: what can investors expect?

The commodity price shock shattered hopes that the inflationary uptick may be transitory. We analyse what is driving inflation across the world and consider what central banks need to do to get inflation back to target levels.

Published 30-5-2022

Market & Macro

Globalisation: the reports of its demise are greatly exaggerated.

Capital Group's political economist Talha Khan and investment director David Polak discuss why the significant headwinds globalisation is currently facing do not mean the end of it.

Published 16-5-2022

Market & Macro

Does the EM debt repricing present a good entry point?

Our investment team’s research shows many developing economies are now in better shape than they have been in the past. Therefore, a cautiously optimistic view may be warranted for emerging markets debt. Here are a few broad trends that support that conclusion.

Published 4-5-2022

Asset Category

Q1 Fixed Income Perspectives

In this quarterly publication from the fixed income team, we discuss:

- Our views on US Federal Reserve policy and the global economy
- Why inflation will likely stick around
- How selectivity is key amid heightened uncertainty
- How strong fundamentals could keep high yield defaults low
- The impact of the Russia-Ukraine conflict on emerging markets

Published 20-4-2022

Market & Macro

The aviation industry currently accounts for about 2.1% of all human-induced carbon dioxide (CO2) emissions in the world, but it is expected to be one of the fastest growing sources over the next few decades as demand for passenger aviation continues to rise.

Despite efforts across the aviation industry to reduce CO2 emissions, the path to net zero greenhouse gas emissions remains challenging.

Capital Group’s ESG team examined various scenarios for potential decarbonisation pathways to 2050, assessing regulatory risks and potential opportunities.

Published 11-4-2022

Market & Macro

The framework for investing in China has changed significantly over the past year due to micro, macro, regulatory and geopolitical factors. China remains investible, but at the right price and in the right sectors. The kinds of companies that might be future potential sources of solid returns could be quite different than in the past decade.

With that backdrop in mind, here is how we are thinking about investing in China today.

Published 5-4-2022

Market & Macro

Climate change is forcing investors to evaluate two new types of risk: transition risk, the cost of transitioning to low-carbon operations, and physical risk, the cost of increased drought, floods, severe weather, and a rising sea level. Water stress is one of the most pronounced physical risks from climate change that investors must consider.

Capital Group's ESG team examines the semiconductor and utility industries to assess how companies are coping with the increased risk of water shortages.

Published 29-3-2022

Market & Macro

For a glimpse of just how volatile commodities currently are, look at nickel markets. Prices doubled in early March. Then they plunged. Then the London Metals Exchange halted trading. This week, the market for nickel — a key component in electric vehicle batteries and stainless steel products — reopened but with strict trading limits.

It’s just one example of how the global economy is being disrupted by Russia’s invasion of Ukraine.

The crucial question for investors: Are these price spikes sustainable?

Published 22-3-2022

Market & Macro

Q&A on Russian debt

In this Q&A, Robert Burgess answers questions around Russia’s upcoming debt payments falling due. He also discusses the risks and implications of a potential default both for Russia and the rest of emerging markets.

Published 16-3-2022

Market & Macro

KEY TAKEAWAYS

If the commodity price increase is sustained, some EM countries may suffer from a deterioration in the terms of trade, weaker growth and a potential negative impact on fiscal and external balances.

While higher commodity prices may have a negative impact on some EM countries, it is important not to lose sight of the opportunities EM equities offer. Equities are trading near historical discounts relative to developed markets and the asset class should continue to benefit from a reduction in EM equity risk premium.

Published 28-2-2022

Asset Category

In deze podcast serie bespreken we met Capital Group's beleggingsprofessionals welke trends de toekomst van beleggen in opkomende markten zullen bepalen.

Aflevering 1: Ontwikkeling, toekomst en trends opkomende markten
Aflevering 2: Stijgende welvaart als aanjager groei opkomende markten
Aflevering 3: Social media en gaming in opkomende markten
Aflevering 4: innovatie drijft sterke groei gezondheidszorg China
Aflevering 5: Opkomend Azië is de sweetspot voor groei
Aflevering 6: Emerging market debt post-corona

LUISTER NU

Published 21-11-2018

Asset Category

Although a passive approach can provide a low-cost introduction to local currency EMD, in this paper we discuss the potential benefits of
an active allocation. These include access to a wider source of returns, given the ability to take off-benchmark exposure, and use multiple levers to capture different drivers of return and manage risk; and a more deliberate allocation of capital, which could mitigate unintended consequences of index construction.

Published 15-11-2018

Asset Category

In this paper, we delve into the potential impact that the surge of investment into US bank loans could have on valuations across the broader sub-investment grade credit markets.

Published 15-11-2018

Asset Category

• Technology stocks could remain volatile for some time amid the potential for
slower earnings growth at some companies and greater regulatory scrutiny.
• There will likely be a dispersion of returns among the FAANG stocks, given
different valuations and where they are in the earnings cycle.
• The long-term outlook for many technology companies remains positive,
supported by strong business models, dominant industry positioning and
potential new areas of growth.

Published 9-10-2018

Asset Category

The increase in spending power of the Asian middle class consumer is a driving force behind global consumption figures – a trend that is forecast to keep rising. Companies with a strong brand presence and competitive franchises are particularly well-placed to tap into
this growing demand. Here, we look at how Capital Group’s Japan Equity (JPE) strategy is positioned to potentially benefit from this key investment theme.

Published 9-7-2018

Asset Category

In this Q&A, Capital Group Global Corporate Bond portfolio manager Vantil Charles outlines why he remains broadly positive on
the global outlook but with an eye on future uncertainty, is currently overweight companies with defensive characteristics. He also
discusses his research approach and why he seeks out ‘good names in bad postcodes’.

Published 30-6-2018

Asset Management

What is the main problem facing the investor today? Some might say potential policy missteps by central banks. Others could point to uneven global growth prospects. While those are very valid issues, all too often, as the founder of modern security analysis Benjamin Graham once said, “The investor’s chief problem – and even his worst enemy – is likely to be himself.”

Published 24-4-2018

Asset Category

Will Tokyo’s 2020 Olympics mark a turning point for Japan? Akira Fuse, Investment Specialist, assesses the potential impact of
the Games and shares related thoughts on the Japan Equity strategy.

Published 17-4-2018

Asset Category

We continue to be in a Goldilocks1 period for the global economy. Growth across
most regions is running modestly above trend, while inflation is gradually moving
higher but remains tame. However, this equilibrium is at risk of being disrupted as
central banks around the world begin to tighten monetary policy, while U.S. lawmakers
move forward with a strong dose of fiscal stimulus via tax cuts and increased spending.

Published 5-1-2018

Asset Category

Finding value in EMD local currency debt, interview with portfolio manager Kirstie Spence in which she shares her outlook on EMD

Published 1-1-2018

Market & Macro

Capital Ideas is built for readers who want to put today’s investment news into long-term perspective.

Since 1931, Capital Group has been singularly focused on delivering superior, consistent results for long-term investors using high-conviction portfolios, rigorous research and individual accountability.

Published 1-1-2018

Market & Macro

Global Outlook 2018