Top Five Investment Themes 2024
29 January 2024
The Unio View 2024
2024 will be an Olympian year in many respects, in terms of the number of people globally who will vote, a record debt burden, the growing need that climate damage puts on us to invest responsibly, and the mind-boggling advances in technologies like quantum computing and AI.
All this is set against a backdrop of surprising economic resilience.
How will Unio’s View develop over 2024?
Forecasting is hard to do, which is why for the year ahead we resist forecasting single events (though we do have views) but instead aim to delineate the important, growing trends and the risks and opportunities in the global system. We feel that this exercise can help our clients as investors, in terms of where these forces will drive asset prices, businesses, and the local economy. Ireland is interesting in that it continues to be a very open economy – exposed to global forces, but that has so far proven its resilience.
So, let's dive into our top five investment themes for 2024 – all of which are interrelated in different ways.
Theme One: Bond Resilience in a World of Debt.
First up is ‘bond resilience in a world of debt’, which we frame as the challenge of finding good quality fixed-income investments – both for companies and governments – that will withstand the risk of rising credit. We think Irish government bonds will be a good example here.
Theme Two: Peak America
Second, one risk event on the horizon is the US election where a second Trump presidency would force companies and investors to radically re-assess the risks associated with investing in US assets. With US stocks - notably the top 7 tech-driven companies – dominating markets we ask whether the time is coming to move towards markets – in Europe and the emerging world – that offer better value.
Theme Three: The 'No-Cession'
Third, we think deeply about the economic cycle, which at the best of times is perplexing. We coin the term ‘no-cession’ to describe the economic climate which is characterized by a mix of slowing manufacturing activity and rising bankruptcies on one hand, offset by strong labour markets and tamer inflation on the other.
Theme Four Responsibility and ESG in a Time of Conflict
Fourth, and again highlighting how investing is increasingly tangled up with politics, in a time of conflict, contested politics, and climate damage – impactful investing is more important than ever, especially so with many ESG frameworks under attack.
Theme Five: What is Next for AI?
Fifth, whilst AI has been around for some time, not least in the data-rich environment of financial markets, the public and financial market consciousness of it took off with the release of ChatGPT early this year. AI is now everywhere it seems, especially in stock valuations. AI-centric firms like Nvidia now trade at rich valuations. We think beyond this to consider all the factors that come after the initial wave of AI excitement – regulation, the value of data, and the building of AI-centric infrastructure.
Unio's commentary will evolve as these themes develop over 2024. We will keep you updated.
At Unio, we are here to help.
If you have any questions on any of the information provided in this update, speak to your Client Manager or contact us at email@example.com.