Our Q4 2021 Outlook - The Economic Recovery is Battling Headwinds

Solid growth scenario maintained but more risks on the horizon
The economic recovery is expected to remain solid over the coming quarters, especially in the developed economies, with normalising labour markets and still very accommodating monetary financial conditions. However, growth is likely to remain heterogeneous amongst world regions and its strength may be affected by a number of different risks. Those risks include: how countries manage the covid crisis (especially the lower vaccination rates in the United States), persistent friction in production and supply chains, a sharper slowdown in China (zero-Covid policy, “common prosperity” policies and Evergrande crisis), as well as budget uncertainties in the United States.

Choice of a more conservative portfolio allocation
Against this backdrop of higher risks, we have chosen a conservative allocation, by adopting notably a Neutral position on the equity markets. However, we remain Overweight the European equity markets, which continue to offer attractive catch-up potential, in an environment that remains underpinned by abundant liquidity. We continue to expect long-term interest rates to gradually increase, and as such are maintaining our Underweight to the bond markets.

Seeking alternative performance and protection from potential instability
We are Overweight the “alternative” asset class, which could benefit from ongoing abundant market liquidity and provide attractive opportunities in terms of returns. Moreover, in order to protect ourselves against market instability, we are overweighting the dollar and gold in our allocation.

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In accordance with the applicable regulation, we inform the reader that this material is qualified as a marketing document. CA25/H1/21 Unless otherwise specified, all statistics and figures in this report were taken from Bloomberg and Datastream on 24/09/2021