Erste Asset Management

Investment View | May 2024

Investment View | May 2024
Investment View | May 2024
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What’s happening on the markets? In our Investment View, the experts of our Investment Division regularly provide insights of current market events and their opinion on the various asset classes.

Note: Due to the public holidays, the March edition exceptionally gets published at the beginning of April. Prognoses are not a reliable indicator of future performance. Please note that an investment in securities entails risks in addition to the opportunities described.

Economic outlook

Global growth is slightly above potential. The growth drivers are more broadly based: Slight slowdown in the USA, return to growth in Europe. The acceleration in inflation in the first quarter points to a pause in the disinflation trend. The surprisingly good economic growth and the excessively high inflation in the services sector reduce the scope for key interest rate cuts. The financial environment nevertheless remains constructive.


1. No landing: Growth resilience and inflation persistence limit the scope for key interest rate cuts. Probability in our view: 60%

2. Soft landing: The disinflation trend continues. The inflation target is reached in the medium term. The key interest rates in the developed markets can be lowered significantly. Probability in our view: 20%

2. Hard landing: The monetary policy environment remains restrictive for too long. Lending guidelines are tightened further and the debt burden increases. The key interest rate cut expectations priced into the market continue to decline. In the event of an acceleration in inflation, central banks could even come under pressure to raise key interest rates. Probability in our view: 20%

Asset classes

The macroeconomic landscape has remained relatively unchanged compared to the previous month. Accordingly, we have maintained our broad allocation strategy unchanged.

Our assessment of the current market environment supports a neutral weighting on equities, a preference for high-yield bonds over sluggish government bonds, and a continued preference for gold.

We anticipate that market sentiment will be influenced by incoming macroeconomic data, particularly from the US labor market and inflation indicators.

Note: Portfolio positions of funds disclosed in this document are based on market developments at 24.5.2024. In the context of active management, the portfolio positions mentioned may change at any time. Please note that an investment in securities entails risks in addition to the opportunities described.


Overall, the equity markets are neutrally weighted. Positive factors naturally include the technical picture, satisfactory corporate earnings and the positive economic trend in the USA. Caution is advised by indicators suggesting a short-term overbought market situation and valuations slightly above historical averages.

Within our equity allocation, we continue to adopt a broadly neutral stance across all regions. Moreover, our allocation in the US healthcare sector provides a defensive component to the portfolio.

For emerging markets, we maintain a neutral allocation overall but have made some regional adjustments this month. We remain favorable towards Latin America due to structural changes and supportive technical indicators. To diversify our emerging market exposure, we have increased our allocation to the EMEA region (Europe, Middle East and Africa), where a combination of valuation and technical indicators are appealing. Specifically, we favor the Middle East, particularly the Gulf Cooperation Council countries.

The Gulf region is attractive due to robust economic growth driven by favorable demographics, significant government spending, and expanding non-oil sectors. Key markets such as the UAE and Saudi Arabia are showing strong PMI numbers (purchasing managers indicators) and promising growth forecasts. Additionally, the region’s relatively modest valuations, high dividend yields, and ongoing structural reforms present substantial upside potential, making it an attractive investment compared to other emerging economies, supported by initiatives like UAE’s Industry 4.0 and Saudi Arabia’s Vision 2030.

Government bonds

Central banks are cautiously signaling a path in which interest rate cuts could be on the cards from the middle of the year. Expectations of interest rate cuts and the economic outlook are currently the main drivers of yields. The development of the geopolitical situation, the focus on the development of commercial real estate in particular and upcoming elections could have an additional impact.

Given this environment, we maintain an underweight allocation. We prefer emerging market government bonds in local currencies and European government bonds. This strategy aligns with our view that the current yield levels offer fair value and enhance portfolio diversification.


Our overall stance on credit remains unchanged, with a continued preference for high yield and an underweight position in investment-grade bonds. The recent uptick in economic activity suggests a lower risk of credit events and potential growth in corporate business activities. Despite tight spreads, we favor short-duration within the high-yield segment, offering attractive all-in yields.

In addition to high yield, we see promising opportunities in emerging markets. Similar to our equity strategy, we are adjusting our regional allocation within the fixed income space. We favor high-yield corporate bonds from Asia over emerging market corporate bonds in general, driven by their higher yields and strong momentum.

The Asian high-yield bond market presents a lot of opportunities, particularly in the booming Indian fixed income market. Sectors such as gaming, renewables, and a robust consumer base also contribute to its attractiveness. Furthermore, recent support measures from China aimed at bolstering the property sector, such as lowering minimum down payments and facilitating affordable housing, contribute to the positive sentiment surrounding the asset class. However, we remain cautious in our positioning towards Chinese developers despite these supportive measures.

Money Market

Money market instruments continue to be a cornerstone of our investment strategy, reflecting our preference for this asset class. We maintain this preference due to the attractive interest rates available at the short end of the yield curve, which allow us to capitalize on opportunities while effectively managing portfolio risk.


Gold has experienced a price breakout and has reached a new all-time high. Physical demand in markets such as India and China was strong. Gold remains attractive at the portfolio level.

On energy and industrial metals, we keep neutral stance, balancing the tight supply with uncertain economic outlook. 

For a glossary of technical terms, please visit this link: Fund Glossary | Erste Asset Management


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N.B.: The performance scenarios listed in the key information document are based on a calculation method that is specified in an EU regulation. The future market development cannot be accurately predicted. The depicted performance scenarios merely present potential earnings, but are based on the earnings in the recent past. The actual earnings may be lower than indicated. Our analyses and conclusions are general in nature and do not take into account the individual characteristics of our investors in terms of earnings, taxation, experience and knowledge, investment objective, financial position, capacity for loss, and risk tolerance.

Please note: Past performance is not a reliable indicator of the future performance of a fund. Investments in securities entail risks in addition to the opportunities presented here. The value of units and their earnings can rise and fall. Changes in exchange rates can also have a positive or negative effect on the value of an investment. For this reason, you may receive less than your originally invested amount when you redeem your units. Persons who are interested in purchasing units in investment funds are advised to read the current fund prospectus(es) and the Information for Investors pursuant to § 21 AIFMG, especially the risk notices they contain, before making an investment decision. If the fund currency is different than the investor’s home currency, changes in the relevant exchange rate can positively or negatively influence the value of the investment and the amount of the costs associated with the fund in the home currency.

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It is expressly noted that this communication does not provide any investment recommendations, but only expresses our current market assessment. Thus, this communication is not a substitute for investment advice, does not take into account the legal regulations aimed at promoting the independence of financial analyses, and is not subject to a prohibition on trading following the distribution of financial analyses.

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