Select your website




Important Notice

We recently learned Amundi Pioneer’s phone number has been used as part of a spoofing scam perpetrated by certain bad actors unassociated with our firm. In conducting this scam these individuals are requesting social security numbers and/or other sensitive personal information in connection with a sweepstakes entry or other promotion. Such phone calls are not from Amundi Pioneer. We would never communicate with our clients or others in this manner. If you receive such a call, you should hang up and not provide any personal information. Please feel free to contact us directly with any questions or concerns. To learn more about similar scams and what you can do to prevent telemarketing fraud, please visit »

Global Investment Views: Equity - July 2018

Perspectives» |

July 1, 2018

Hold on Amid Risks

The positive cyclical backdrop is expected to support earnings growth over the rest of the year. Revenue growth has reaccelerated in recent quarters; economic profit is growing incrementally again. In our view, equities could still post the highest returns among asset classes. The risks to this outlook, however, are elevated, and include the mature stage of the economic and financial cycle, and increased trade tensions. We would also consider the risk of more aggressive tightening of monetary policy if inflation picks up. Overall, we could see higher volatility compared to the last five years and with the need to play different themes in the transition towards a more mature phase of the cycle. The capex story is still confirmed and is strong across the board. A sectoral rotation towards a value theme could also be considered for the next phase, looking at the exaggerated expansion of growth (mainly  driven by technology) vs value.


European equities were negatively affected by the Italian political crisis and tensions surrounding trade disputes. Earnings remain supportive and valuations are overall attractive. A weak EUR is a potential tailwind in terms of EPS growth for the coming quarters. Given the increased risks, we are trimming our cyclical preference to a more balanced one (eg, preferring food retail and utilities to materials). Quality is now outperforming even in Europe, and the trend is now encouraging. We continue to prefer energy, luxury and IT in terms of sector allocation. Bank and insurance are still  favored, despite the recent rout.

United States

Fundamentals are solid across the US market; earnings revisions are strong. The US consumer is quite healthy, taxes are lower, regulations are easing in many sectors, and capex/R&D is increasing. Adjusted for still very low interest rates, US equities are not overvalued. Critical issues are wage inflation, raw materials price increases, competitive pressures, and trade policy as an offset to the tax reform and regulatory windfall. It is key to identify companies with pricing power, to understand logistics pressures as business models evolve, and to assess trade policy (NAFTA, China, tariffs). On this perspective, a bottom-up investment process can help to maintain higher quality and lower profit volatility in a portfolio. Sector-wise, consumer discretionary, information technology, and financials remain our favorite picks.

Emerging Markets

Despite short-term volatility, Emerging Market equities should be able to weather the more challenging external conditions. Earnings dynamics remain favorable. On the other hand, rising US protectionism is a headwind to GEM EPS. Domestic factors and reforms can reduce the spillovers (eg, India could be more sheltered against trade war risk). Among our country preferences, we like Russia on improved macro management (both fiscal and monetary), external account surplus, very attractive valuation and a stronger oil price. In China, despite the mild slowdown, we expect financial deleveraging and reforms to continue. We are thematically positive on companies supported by good cash flows and dividend yields. We are constructive on the tech, insurance and energy sectors.

Important Information


Unless otherwise stated, all information contained in this document is from Amundi Pioneer Asset Management (“Amundi Pioneer”) and is as of July 1, 2018.


The views expressed regarding market and economic trends are those of the authors and not necessarily Amundi Pioneer, and are subject to change at any time. These views should not be relied upon as investment advice, as securities recommendations, or as an indication of trading on behalf of any Amundi Pioneer product. There is no guarantee that market forecasts discussed will be realized or that these trends will continue. These views are subject to change at any time based on market and other conditions and there can be no assurances that countries, markets or sectors will perform as expected. Investments involve certain risks, including political and currency risks. Investment return and principal value may go down as well as up and could result in the loss of all capital invested.

This material does not constitute an offer to buy or a solicitation to sell any units of any investment fund or any service.


Date of First Use: July 1, 2018.


Filed Under

Social Sharing

Contributing Authors

Ken Taubes
Chief Investment Officer, US, Amundi Pioneer


Ken Taubes
Executive Vice President,
Chief Investment Officer, US