When it comes to the investment climate, the views of funds which manage a large portfolio are always important, and it is even more so when the fund manager happens to be Europe’s largest. In an interview that took place in Singapore, Amundi Asset Management’s chief investment officer Pascal Blanque laid out their plans for the future. He went on to allay fears about the rising US Dollar as well. The strength of the dollar had discouraged many from taking significant risks, but according to Blancque, that is no longer the case. He said, “The two macro threats — the dollar and higher interest rates coming from the U.S. — are diminished, and they are behind us. There is room moving forward for an appreciation of most currencies in the emerging-market space. So this is a piece of good news.”
Amundi manages $45 billion in emerging markets assets, and they are betting big on some of the events that could have a huge bearing on the performance of emerging markets. The fund manager believes that the China-United States trade war tensions will eventually ease and a less than hawkish outlook from the Federal Reserve will help in rejuvenating developing economies. 2018 had been a poor year for developing economies in general. It is interesting to note that the MSCI Emerging Market Currency Index has shown a rise of 1.9% so far in January 2019.
However, Blanque said, that although the strong dollar may no longer be a major issue, there remain concerns overgrowth at a global. In that light, it would be far more prudent to invest in economies which have the strongest fundamentals among the emerging economies. Chile, India, and Russia are the three markets that Amundi is looking at for investment opportunities in 2019.
On the other hand, the fund manager is going to use the balance of payments as an important indicator when it comes to deciding on markets that will not be touched. In that regard, Turkey remains a pariah for Amundi, while there is a great degree of caution when it comes to bets in Argentina and South Africa. South Africa also face uncertainties due to elections, Blanque added. As far as the world’s biggest trade war between the United States and China is concerned, Blanque seemed upbeat about the possibilities. He said, “I’m not expecting something really bad. At the margin, I would expect probably more positive signs than feared.”