Deutsche Bank Private Bank’s (PB) CIO expects moderate economic growth in industrialised economies next year, but with Asia standing out as the global growth driver, the prospects for the main asset classes “appear reasonably good”.
“Markets need to be convinced that growth will pick up again later in 2024,” global chief investment officer Christian Nolting, told a media briefing last week. “Investors also need to look forward to the risks and opportunities provided by more structural economic change.”
In particular, Deutsche Bank PB believes that Asia remains the growth engine of the global economy, with growth rates above developed economies.
It forecasts GDP growth for China of 4.7%, based on continued monetary and fiscal policy support, “which should create a generally favourable backdrop for domestic investment, employment and thus private consumption in 2024,” said Stefanie Holtze-Jen, CIO for Apac.
Meanwhile, “Southeast Asia’s power economies of India and Indonesia are also contributing to Asia’s momentum.”
Twelve major themes for global investment
Overall, the German private banks identified 12 key themes that will lay the foundations for investment next year.
These include (geo)politics, with domestic politics increasingly shaping foreign policy agendas during the biggest election year in history, the need for greater economic competitiveness and the fight against stubborn inflation.
Major asset market themes are the importance of real yields for bonds and the relative appeal of investment grade credit, stable foreign exchange rates, robust corporate earnings growth – albeit with valuations tempered by high interest rates – and a preference for US growth stocks as well as European and Japanese financials, consumer discretionary, industrials and energy sectors.
Among commodities, Deutsche Bank PB expects oil prices to rise, although it still believes that energy transition “may point the way to investing in the sustainable economy”. Meanwhile, alternatives, such as infrastructure, may be a good source of diversification.
Finally, the bank warned that “measures [such as interest rates] to create stability may create new risks”, and it emphasised that the longer-term focus for portfolios should be on growth.