- Findings from the Natixis Strategist Outlook survey reveal split view on risk assets, with roughly half anticipating a selloff and half expecting a continued equity rally through December.
- COVID second wave tops list of concerns, followed by US/China trade tensions and the upcoming US elections.
- Nearly Unanimous (91%) of strategists believe ESG investing is one of the winners of the pandemic
- Over three-fourths (78%) of respondents predict a Biden win in US presidential election.
ZURICH/LONDON/BOSTON, Sept. 10, 2020 – In the wake of the quickest and sharpest selloff and the quickest rebound in history, investment experts across the Natixis organization share a relatively optimistic economic outlook, but consensus says a full recovery will take time, according to the Natixis Strategist Outlook survey published today by the Natixis Investment Institute.
The report, which explores the findings of 36 strategists, economists and portfolio managers representing Natixis Investment Managers, 14 of its affiliated asset managers and Natixis Corporate & Investment Banking, shows broad agreement on the risks ahead and some likely long-term consequences from the COVID crisis, but are split in their views on what this means for risk assets over the coming months.
Esty Dwek, Head of Global Macro Strategy, Solutions, Natixis Investment Managers said; ‘While there is consensus across the group that the road to recovery will be bumpy, it’s certainly not clear which way the markets will go into the end of the year. What we do anticipate as we move towards the US elections is increased political volatility and, not uncharacteristically, election drama.”
The road to recovery
Despite the rebound so far and the unprecedented fiscal and monetary support provided to date, one-third of strategists anticipate a W-shaped recovery, in effect projecting another economic decline. This sentiment is shared by respondents who anticipate a rally (47%) and those who see a selloff (53%), making the second dip a question of when, not if, for them.
As a result, nearly half (44%) believe that while the recovery is under way, the initial impetus is likely to stall. And despite the stock market’s swift recovery, few experts (2.8%) anticipate the economy will follow suit.
COVID dominates market risks
With public health experts reporting that risks could increase as a potential second wave ripples across the globe in the fall and early winter with flu season, 86% of those surveyed give COVID the leading high risk rating “above 5” for an average risk rank of 7.5.
Although the survey respondents are generally unconcerned about the market risks posed by foreign interference in the upcoming US presidential election (average score 3.5), Natixis strategists are anticipating political volatility and election drama.
All eyes on US election Although respondents are optimistic nominee Joe Biden will win the US presidential election (78%), there is concern over how any result will be received by the American public. Half of respondents (50%) expect the results will be contested regardless, and half predict the election will result in social unrest (50%).
The majority of participants believe that a Biden election will be better for global trade (75% respondents) and geopolitical risk (75%), while 61% of those surveyed give the advantage to the Democratic party on the global economy. Despite showing confidence in a Biden win, more than half (58%) believe that Donald Trump’s reelection would be better for equities, given prospects for lower corporate taxes and a pro-business perception correlated with Trump. When it comes to bonds, strategists offer little opinion, which likely reflects the might of the Fed and a view that rates will be even lower for longer, regardless of who sits in the Oval Office.
Winners and losers; positive ESG forecast
Strategists are unanimous in declaring technology a clear market winner. Similarly, 94% expect healthcare to become an even stronger sector for policymakers going forward, and stay-at-home businesses are a close third (91%). Most surprising, though, is what the pandemic reveals about the resiliency of environmental, social, governance (ESG) investing. With ESG investment strategies proving mostly defensive in the first six months of the year, interest in ESG investing has grown substantially, giving this investment approach a strong proof point that makes it a winner for 91% of strategists, with 75% of this group indicating they believe that ESG investing will become more prominent/mainstream as a result of this crisis.
With millions staying home and projections for a slow path to economic recovery, traditional entertainment (85%) and travel (83%) rank among the top losers. Energy, which has experienced its own unique challenges since Q1 2020, is also a likely loser for 77% of respondents.
About the Natixis Strategist Outlook
Natixis Strategist Outlook survey conducted by CoreData Research, July 2020. Survey included 36 market strategists, economist and portfolio managers from across Natixis Investment Managers, its affiliated investment managers and Natixis Corporate & Investment Banking. For a copy of the report please click, https://www.im.natixis.com/li/markets/strategist-outlook-split-down-the-middle
- Axel Botte, Global Strategist, Ostrum Asset Management
- François-Xavier Chauchat, Global Economist and member of the Investment Committee, Dorval Asset Management
- Isaac Chebar, Fund Manager, European Value Equity, DNCA Investments3
- Esty Dwek, Head of Global Market Strategy, Natixis Investment Managers Solutions
- Jack Janasiewicz, CFA®, SVP, Portfolio Manager & Portfolio Strategist, Natixis Investment Managers
- Karen Kharmandarian, Chairman and Partner, Thematics Asset Management
- Garrett Melson, CFA®, Portfolio Strategist, Natixis Investment Managers
- Jens Peers, CFA®, CEO and CIO, Mirova US
- And more
Billie Clarricoats – Natixis Investment Managers
Tel. : +44 78 80 19 56 72
Nicole Nussbaumer – Voxia communication
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About Natixis Investment Managers
Natixis Investment Managers serves financial professionals with more insightful ways to construct portfolios. Powered by the expertise of more than 20 specialized investment managers globally, we apply Active Thinking® to deliver proactive solutions that help clients pursue better outcomes in all markets. Natixis Investment Managers ranks among the world’s largest asset management firms1 with more than $1 trillion assets under management2 (€906.0 billion).
Headquartered in Paris and Boston, Natixis Investment Managers is a subsidiary of Natixis. Listed on the Paris Stock Exchange, Natixis is a subsidiary of BPCE, the second-largest banking group in France. Natixis Investment Managers’ affiliated investment management firms include AEW; Alliance Entreprendre; AlphaSimplex Group; DNCA Investments;3 Dorval Asset Management; Flexstone Partners; Gateway Investment Advisers; H2O Asset Management; Harris Associates; Investors Mutual Limited; Loomis, Sayles & Company; Mirova; MV Credit; Naxicap Partners; Ossiam; Ostrum Asset Management; Seeyond; Seventure Partners; Thematics Asset Management; Vauban Infrastructure Partners; Vaughan Nelson Investment Management; Vega Investment Managers;4 and WCM Investment Management. Additionally, investment solutions are offered through Natixis Investment Managers Solutions, and Natixis Advisors offers other investment services through its AIA and MPA division. Not all offerings available in all jurisdictions. This document is being provided by Natixis Investment Managers, Switzerland Sàrl, Rue du Vieux Collège 10, 1204 Geneva, Switzerland or its representative in Zurich, Schweizergasse 6, 8001 Zurich, and is being provided solely for information purposes. For additional information, please visit Natixis Investment Managers’ website at im.natixis.com | LinkedIn: linkedin.com/company/natixis-investment-managers.
Natixis Investment Managers’ distribution and service groups include Natixis Distribution, L.P., a limited purpose broker-dealer and the distributor of various U.S. registered investment companies for which advisory services are provided by affiliated firms of Natixis Investment Managers, Natixis Investment Managers S.A. (Luxembourg), Natixis Investment Managers International (France), and their affiliated distribution and service entities in Europe and Asia.
About Natixis Investment Institute
The Natixis Investment Institute applies Active Thinking® to critical issues shaping the investment landscape. A global effort, the Institute combines expertise in the areas of investor sentiment, macroeconomics, and portfolio construction within Natixis Investment Managers, along with the unique perspectives of our affiliated investment managers and experts outside the greater Natixis organization. The goal is to fuel a more substantive discussion of issues with a 360° view of markets and insightful analysis of investment trends.
1 Cerulli Quantitative Update: Global Markets 2020 ranked Natixis Investment Managers as the 17th largest asset manager in the world based on assets under management as of December 31, 2019.
2 Assets under management (“AUM”) as of June 30, 2020 is $1,017.7 billion. AUM, as reported, may include notional assets, assets serviced, gross assets, assets of minority-owned affiliated entities and other types of non-regulatory AUM managed or serviced by firms affiliated with Natixis Investment Managers.
3 A brand of DNCA Finance.
4 A wholly-owned subsidiary of Natixis Wealth Management.