ABN AMRO remains neutral on equities

Press release -

ABN AMRO will remain neutral on equities. The bank argues that this position is justified given the conflicting signals affecting the investment climate. ABN AMRO does not believe that the economy will enter a recession, nor does it believe that specific risks such as Brexit and the Chinese-US trade conflict will escalate.

ABN AMRO Private Bank's Global Head Investment Centre Richard de Groot comments, ‘Corporate earnings for Q4 of 2018 were not as poor as expected, although many analysts had already downgraded their forecasts. The recovery on the stock markets also buoyed investor sentiment and helped dampen the market’s volatility. In other good news, domestic demand from consumers in Europe and the US remains steady. Labour markets are also in a strong position. No indication exists of an imminent collapse of consumer spending, nor that consumer confidence has suffered any serious harm. Encouraging signs are also visible in global production and trade data, although the overall picture there is still very poor.’

Economic slowdown continues

While these are favourable developments, the global economy is still slowing, and ABN AMRO believes that this will continue throughout the first half of the year. The bank does not expect economic growth to pick up again until the second half of 2019, when the economic reality will start to feel the effect of changing monetary policies, by which ABN AMRO means the policy shifts of some central banks. In the US, for example, the Fed has announced that no further rate hikes will follow for the present, while the ECB is also not expected to raise interest rates until 2020, and Chinese policymakers are introducing new stimulus measures.

Positive on commodities and emerging markets

ABN AMRO is positive on commodities: oil prices have recovered, and the market is optimistic about trade and the impact of output reduction. The US sanctions against Venezuela and Iran may also boost oil prices. Lastly, with the global economy still growing, the demand for energy in the form of oil is also increasing. At the regional level, ABN AMRO’s preference is for emerging markets, in both its bond portfolio and its equity portfolio. In the overall spread of assets, ABN AMRO is negative on bonds, having recently reduced its position in Italian government securities in this asset class.


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