Q1 2024-Quarterly Investment Letter

The economy faces a slowdown with rising capital costs, yet resilient consumers and government support avert an imminent recession. Markets expect a “soft landing” economic cooling.

Market sentiment pivoted favourably as the perception of inflation underwent a positive shift.

Anticipated 2024 Fed rate cuts, a departure from the prior hawkish stance led to a decline in US Treasury yields to 3.9%, signalling an expected 150 basis point reduction.

Mild inflation data reinforces the belief that the ECB has finished its hiking cycle, increasing the probability of maintaining a restrained policy stance.

The onshore CSI 300 fell by 14.0% in 2023, reflecting weak domestic demand and persistent deflationary pressures in China.

The potential imposition of peace in Ukraine and the dynamics of the US election year could trigger significant positive market reactions.

Conclusion: In light of the absence of an imminent severe recession, our current risk positioning remains unchanged. However, we stand ready to trim our equity allocation should interest rates experience a resurgence. Given current valuation levels and a risk/return perspective, we continue to favour selective credit over equities. This translates into maintaining an overweight position in credit investments, with emphasis on loans and non-cyclical short-term high-yield bonds offering yields in the 8-10% range. Our stance on equities remains neutral, as we lean toward an absolute return approach rather than a traditional relative value mandate in this environment.

Full Quarterly Investment Letter Q1-2024

Alpinum Quarterly Investment Letter
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