Geopolitics and inflation trends are the biggest risk factors for the global economy, said Bjoern Jesch, global chief investment officer at DWS.
As a result, he favours robust, well-diversified portfolios that should cope well with different economic scenarios.
Writing in the DWS Market Outlook for 2024, Jesch said he found Japanese and European equities to be “promising”, ahead of expectations of a soft landing for the economy in Europe and earnings growth and valuation projections for Japan.
Jesch added: “We are currently seeing the comeback of fixed-income investments after a historically long loss phase of 38 months for in dollar-denominated bonds.
"From a multi-asset perspective, we can handle the current challenges – geopolitical tensions, central banks at a crossroads, higher interest rates – very well. We favour robust, well-diversified portfolios that should cope well with different economic scenarios.
"In view of our base scenario of a soft landing for the economy with a fall in inflation and interest rates, we are positive about a longer duration.”
When it comes to inflation, however, Jesch noted that “lowering inflation from 10 to five percent was the easier part for the central banks. Getting from five to the targeted two percent will be much more difficult”.
According to Jessica Hardman, head of European real estate portfolio management at DWS, 2024 should be a good time to invest in real estate equity.
This is because market risks are largely priced in after the price falls of the past 18 months, Hardman added.
She added: “In the European market, the residential and logistics real estate sectors are particularly promising. Supply is low, higher financing costs are leading to significantly higher demand for rental properties and rental prices are likely to rise again.”
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