'I am interested in AstraZeneca's diversified portfolio'
"The other favourite companies are Tsmc, Ge Aerospace and Meta Platforms."
Key points
Capital Group manager John Lamb analyses the characteristics a company must have to be attractive, but also the countries that, taken individually, offer interesting investment opportunities.
The difficult geopolitical environment fuels macroeconomic uncertainty: what are the drivers of global markets in the medium term?
The short-term outlook for the global economy depends on the situation in the Middle East, particularly for energy markets, which is difficult to predict. However, investors should keep the focus on companies that can benefit from structural trends, rather than cyclical dynamics. In the medium to long term, we observe broader trends. Undoubtedly, we are in an era of high geopolitical tensions, which could redefine trade and capital flows. We are also in an era of profound technological transformations in AI, which could have a major impact on productivity and labour.
Where are the opportunities for equity investors today?
Investors might look towards companies with features that can preserve profitability in a context of cost pressures, such as pricing power, high and stable margins and contractual cost adjustment clauses.
On what factors will central banks' monetary policies be conditioned?
This is a complex phase for central banks. In Europe, if oil remains high, we could see second-round effects on inflation. Labour markets remain tight due to low unemployment and there are clear signs that fiscal stimulus is starting to have an impact on the German economy. Upside risks for inflation and growth may push the ECB to act faster than expected. The Fed is perhaps in a more difficult position because of the weakening labour market, which it might prioritise over inflation. This divergence could continue the recent trend of convergence between European and US real rates, putting further downward pressure on the dollar.
Countries to be monitored
Geopolitical fragmentation may offer opportunities in the long run as countries take autonomous measures to boost their national economies. Germany is implementing a substantial fiscal stimulus to support infrastructure and defence, while in Asian countries such as Japan and Korea, measures have been introduced to improve corporate governance and shareholder focus. However, the decisive issue is to identify the right companies, regardless of location.
