Outlook Outtakes III: Growth, Private Markets, Infrastructure – AGF
TL/DR –
The members of AGF’s Investment Management Team have posited that interest rates may have peaked, and inflation should remain under control, providing a better backdrop for risk-taking activities and growth stocks. The team also predicts that the end of the rate-hiking cycle could catalyze an increase in positive outcomes, with capital being redeployed across broader strategies. In addition, they anticipate that companies with exposure to U.S. infrastructure construction projects will benefit from government programs such as the Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA).
AGF Investment Management Team’s Perspectives on Global Financial Markets
The AGF Investment Management Team discusses key financial market trends in this week’s round-up, focusing on the significant insights of AGF’s Outlook 2024 publication.
Growth Opportunities
Assessing the market landscape, it appears possible that interest rates have peaked and inflation should remain in check. This could provide a more favorable environment for risk-taking and growth stocks. The key factor will be how the broader U.S. economy develops over the next six months. If resilience prevails amidst high rates, the stock market could perform well. Additionally, certain market sectors have devalued to the point where they now present potential for growth. (Growing Pains)
Private Equity Insights
The current market state has generated mixed returns. However, the end of the rate-hiking cycle could stimulate an increase in positive results as idle capital is invested in a wider range of strategies, including privately held equities and credit. (A Turn for the Private Good)
Constructive on Construction
Lower rates may result in reduced financing costs, increased financing availability, and better return on investment for cyclical stocks. There is specific bullish sentiment towards Engineering & Construction companies with exposure to U.S. infrastructure construction projects. These projects are likely to be supported by government programs like the Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA), along with ongoing reshoring and energy transition initiatives. (What if There’s a Recession (And Central Banks Start Cutting Rates)?)
For full bios, please refer to our contributor’s page.
Views in this blog represent the authors and may not align with AGF’s opinions. Data was sourced from Bloomberg, Reuters and other sources as of December 5, 2023. Market conditions may change, and AGF Investments accepts no responsibility for individual investment decisions based on this information.
This article may contain forward-looking information subject to risks, uncertainties, and assumptions that could cause actual results to significantly differ.
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