Industry news and views from Panacea and our partners.
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AXA IM: Royal Cash and Limited Convictions
Markets are less volatile than two weeks ago. There have not been any more bank failures. Bond yields are low, and stocks are up on the month and the year.
AXA IM: Is transparency the answer to sustainability uncertainty?
Most asset managers across Europe in recent months have had to re-evaluate how they classify their sustainable funds and strategies.
AXA IM: Take Two: Fed Chair signals faster rate hikes are possible; China sets new growth target
Federal Reserve chair Jerome Powell signalled the possibility of a return to larger interest rate increases at the US central bank’s 21-22 March meeting.
AXA IM: UK Reaction: Wages cool as job growth remains firm
The UK unemployment rate was unchanged at 3.7% in January 2023 (consensus 3.8%) as economic activity continued to rise but was offset by continued strength in employment.
AXA IM: Long-term trends present compelling opportunitiesIs transparency the answer to sustainability uncertainty?
Most asset managers across Europe in recent months have had to re-evaluate how they classify their sustainable funds and strategies.
AXA IM: UK Outlook: Stronger near-term prospects but challenges remain
UK growth is likely to slow further in 2023, driven by high inflation and slowing demand – but the downturn is likely to be shallower than initially expected and business surveys have been somewhat more positive.
AXA IM: Investing in 2023: Time for a little more optimism
The challenges faced by markets in 2022 – the Ukraine crisis, inflation, rapidly tightening monetary policy and slower economic growth - are unlikely to retreat anytime soon; the threat of further market volatility is a constant.
AXA IM: Postcard from Davos
The contrast between economists – generally pessimistic about the chances to avoid a recession in 2023 – and corporates’ often upbeat expectations was very tangible in Davos.
AXA IM: High-low silver lining
There are several themes which could support better market returns going forward. Concerns that bond returns could be positive when central banks are still raising rates have given way to questions about what parts of the fixed income market are the most attractive.
AXA IM: UK Reaction: Unemployment holds steady as pay growth continues to rise
The unemployment rate for November 2022 remained at 3.7% when compared to last month’s figure, in line with consensus expectations. Over the quarter, the unemployment rate rose by 0.2 percentage points (ppt). Unemployment has picked up slightly, but the labour market remains tight with unemployment well below its historic averages, for example between 2015-2019 unemployment averaged 4.7%, 1 ppt higher than current levels. The rise in unemployment was driven by increases in the size of the workforce as economic activity pushed higher.
AXA IM: Could an Alzheimer’s breakthrough herald a major new market for biotech?
A successful trial of a new Alzheimer’s drug heralds a breakthrough in the treatment of the disease – and could signal the start of one of the potentially largest markets within biotech.
AXA IM: A clear path towards net zero
Investors are lining up to make commitments to achieve net-zero portfolios. But with many different considerations to keep in mind, the process can become daunting. Bruno Bamberger, senior solutions strategist at AXA Investment Managers, discusses the challenges that investors face in turning commitments into action and the role that proper measurement plays in the process. He also highlights the impact of climate-related risks on the road to net zero, as well as the importance of avoiding greenwashing.
AXA IM: Should companies do more to ease the cost-of-living crisis?
The cost-of-living crisis shows little sign of abating. Inflation remains uncomfortably high and continues to surprise to the upside. The energy crunch is proving alarmingly persistent, with OPEC+ determined to keep oil prices higher through a commitment to production cuts.
AXA IM: Goodbye 2022, here’s to the next 12 months
As always, financial markets are awash with attempts to explain what is going on and forecast what will happen next. Generally, most people struggle with the first, and fail miserably with the second. So, it is with great trepidation and humility that I look forward. The markets are the aggregation of a very large number of views and actions, and the efficient markets hypothesis argues that prices always reflect all available information.
AXA IM: Take Two: Russia bans oil sales to price-cap countries, Bank of Japan ramps up bond buying
Markets eased their way to the end of a difficult year which has been dominated by the effects of Russia’s invasion of Ukraine, persistent COVID-19 issues in China and the monetary policy implications of sticky inflation across many countries, most notably the US.
AXA IM: Could an Alzheimer’s breakthrough herald a major new market for biotech?
A successful trial of a new Alzheimer’s drug heralds a breakthrough in the treatment of the disease – and could signal the start of one of the potentially largest markets within biotech.
AXA IM: Investment Outlook – Positive but tempered return expectations
There were few places to hide in 2022. Inflation, monetary policy tightening and geopolitical risks marked a stark contrast to the drivers of returns in 2020 and 2021; the backdrop ultimately forced a revaluation of fixed income and equity assets. From low to high inflation, and from low to high interest rates, returns suffered as markets adjusted to the new paradigm.
AXA IM: High inflation and flat screens
Inflation is not homogenous. Not everything we buy is going up in price. But the things we need are. Food and energy price inflation is still high and that feeds into pricing dynamics in the rest of the economy.
AXA IM: Take Two: US economic growth revised up while Eurozone inflation slows slightly
The US economy grew faster than expected in the third quarter (Q3), while Federal Reserve Chair Jerome Powell said the pace of interest rate rises could ease “as soon as December”.
AXA IM: Year of the bond
Monetary policy is more art than science. We all agree that higher rates undermine growth and that helps bring inflation down. But the precise mechanisms and timing are unclear still.
AXA IM: Independence Days
COP27 was disappointing. No additional emission reduction ambition has come up. The agreement on providing financial help to developing nations towards their transition is big on principles but light of actual commitments and dependent on yet another future deal.
AXA IM: UK Reaction: Rising energy costs drive inflation to 11.1%
CPI inflation rose to 11.1% year-on-year (y/y) in October up from 10.1% in September, as increases in household energy and food prices pushed headline CPI to a new 40-year high.
AXA IM: Modest but maybe meaningful: The key COP27 takeaways for investors
We expected the COP27 climate summit to be challenging and, unfortunately, we were not surprised. More than 100 world leaders headed to Sharm el-Sheikh, Egypt, hoping to make progress on commitments made at last year’s conference – but instead we were left with “much homework and little time,” in the words of United Nations (UN) Secretary-General António Guterres.
Active management
With passive funds becoming increasingly popular due to their low-cost nature, what are the benefits of investing in active funds?
An introduction to Responsible Investing Part 2
Gain a deeper understanding of responsible investing, AXA IM’s key research themes and how we integrate sustainability factors into our investment processes.
An introduction to Responsible Investing Part 1
What is responsible investing, and why is it important? Discover more about how you can approach responsible investing, and find out about ESG, active stewardship and more.
AXA IM: Is social the most important part of ESG investing?
Economics is a social science. It is the study of how people collectively manage scarce resources to generate goods and services that satisfy basic and other needs – and businesses are key building blocks of the economic and social ecosystem.
AXA IM: Robotech strategy - September 2022
Equity markets fell sharply in September, with most major markets ending the month below the prior lows seen in June. Macro-economic impacts continue to dominate, with concerns around rising energy prices and broader inflation dampening consumer confidence. During September, the Federal Reserve hiked interest rates by 0.75%1 , for the 3rd consecutive time following similar increase in June and July.
AXA IM: Three reasons why social investing will be a driver of long-term sustainability
As well as being a tragedy for the local population and the sombre geopolitical ramifications, the war in Ukraine is likely to have a significant impact on the European economy, jeopardising its recovery just as it was finally extricating itself from the pandemic.
AXA IM: Back to the 1990s
Investors’ propensity to hope for an imminent “dovish pivot” – although it was defeated again by robust US payroll data last week - reflects a habituation to the regime of the last 20 years, when central banks could come to the rescue of the real economy and the market, since their primary mission – price stability – was fulfilled irrespective of cyclical conditions thanks to powerful structural forces.