“The big story is about measures taken [to shift to] consumption-driven growth.”
The investment manager is betting on consumer discretionary, information technology and select financial companies. But it has an underweight call on energy, utilities and materials companies.
Southeast Asia tactical plays
Elsewhere in Asia, Blanqué said the fund house is tempted to play off the new government expectations in Indonesia and Thailand.
“We see a reason for hope going forward. Indonesia is to an extent a national governance play. The worst is behind us in terms of currency weakness. The current account deficit, though still to be confirmed, is showing some signs of improvement.”
Some of the fund houses’ main overweights are on Indonesian consumer, materials, property, transportation and banks.
The sentiment has also turned positive on India after the formation of the new government led by Narenda Modi.
India figured among one of the most vulnerable countries in 2013 when the US Federal Reserve announced its plans to gradually taper down its quantitative easing programme.
“One year ago, when the crisis hit in the emerging space, India was put into the bad six along with Brazil, Russia, Turkey, South Africa, and Indonesia,” Blanqué said. “But the situation has changed.
“We have seen more commitments in terms of reforms. It would be a governance play. Time will tell, but investors are now ready to take a bet on the commitments,” he said.
India’s double-digit inflation as well as current and fiscal deficits, however, remain key concerns.
Global rate cycle
Blanqué is of the view that global interest rates are likely to stay low even as the US looks poised to hike rates next year.
“The Fed is tapering, but the rate hike will be marginal. This to some extent will be offset by the two big central banks [in Europe and Japan] that are fuelling the global system with excess liquidity.”
Furthermore, he stressed that US interest rates will not be the key factor driving emerging economies.
“There are some economies more exposed to rising rates in Southeast Asia. But again, fears are overdone in many.”
“Markets are looking at India and Indonesia differently now [compared to last year] based on the ability of authorities to deliver on fundamentals such as lower inflation and current account rebalancing.”
Fixed income plays
On the bond side, Amundi favours European bonds against US bonds. It is also biased toward the high yielding debt papers issued by Indian and Indonesian issuers.
In terms of Asian currencies, the fund house hs a positive bias on the Chinese renminbi, Indonesian rupaiah, and the Malaysian ringgit.
