Kamco Invest, a regional non-banking financial powerhouse based in Kuwait, recently discussed the market outlook for 2021 and the impact of the new US administration on the investors’ sentiments at a webinar which was attended by experts from Amundi, one of the top ten global asset managers. 

 

Kamco Invest, which boasts one of the largest AUMs in the region, pointed out that the pandemic has accelerated the trend toward investments that take climate, society, and company structures into account. 

 

Faisal Al Othman, the director of Third-Party Solutions at Kamco Invest, moderated the discussion with Kenneth Taubes, Chief Investment Officer of Amundi (US); Lotfi Ben Lazrak, Director of Institutional Clients at Amundi (Middle East); Conor McCarrick, Senior Credit Analyst & Strategist EM Fixed Income at Amundi (Dublin) and Ljubomir Krispinovic, VP for Equity & Fixed Income at Kamco Invest.

 

During the webinar, Al Othman discussed several key topics with panelists including outlook for 2021, changes expected in US policies, short and long-term impact on US fixed income and equity markets, views on oil from a global and GCC perspective, and where regional institutions have been deploying, amongst others.

 

Taubes believes that promising vaccine announcements represent a potential watershed event for the US economy; not only should it have a positive impact on near-term sentiment, but it could propel a return to a more normal economy in 2021. 

 

The positive momentum within the economy may propel fourth quarter GDP growth higher than consensus, potentially diminished by record Covid-19 infections and the low probability of the quick passage of additional fiscal stimulus. 

 

In the US, GDP should further benefit from passage of additional fiscal stimulus of approximately $1 trillion early into the Biden administration, pending the outcome of the Georgia Senate race. 

 

While significantly lower than what was contemplated under a “Blue Wave”, this package would combine Covid-related stimulus with some elements of Biden’s platform, including infrastructure spending. 

 

Taubes noted that it is unlikely Biden will be able to enact most of his proposed tax increases, and their absence will further bolster corporate earnings and by extension, increase employment, said the top official.

 

Taubes pointed out that the US investment grade and high yield markets are modestly attractive, while emerging market sovereign debt and currencies offer more attractive relative value. Within emerging markets, Asian securities and currencies may outperform, as China leads the world out of recession. 

 

According to him, equities continue to be more attractive than fixed income because earnings yields through October exceeded investment grade corporate yields, and the gap between dividend yields and the 10-year Treasury yield was the largest since the 1950s. 

 

The 2021 economic recovery should drive a rotation from the mega-cap growth stocks towards more cyclical growth and cyclical value stocks, he stated.-TradeArabia News Service