Market Talk

Convertible bonds have a rich history of outperformance: they have outperformed equities not just during the recent market turbulence but also over the past 25 years. In our latest podcast episode, convertible bond experts Tarek Saber and Martin Haycock explore the benefits of investing in convertibles during market volatility and throughout the cycle. They discuss how thematic investing helps them navigate economic cycles and how investors can best get started in the complex world of convertible bond investing. "Investing in convertibles is like climbing with a rope," says Haycock, senior product specialist at NN Investment Partners. "It’s somewhat slower as you make your way up the slope, but if you slip, you have much less far to fall.”

Price movements last week on equity and bond markets were more limited than in previous weeks. Whether this calm continues will depend on whether coronavirus data show signs of improvement, according to Ewout van Schaick, head of Multi Asset. Developed market sovereign bonds and high-quality corporate bonds may offer allocation opportunities for investors seeking alternatives to cash. “We need to get some guidance on when the lockdowns will end before we see opportunities in the more risky asset classes,” Van Schaick says in our latest podcast. “That’s why we still stay quite cautious on equities.”

As Head of Fixed Income at NN IP in Singapore, Joep Huntjens was in a position to feel the early effects of the corona crisis first-hand. However, it was only in March, when hard-hit countries like China and South Korea were starting to recover, that markets worldwide plummeted, including those in Asia. While the US and Europe are still firmly in the grip of the crisis, Asia is starting to pick up the pieces and can at least start to assess the damage. In this podcast, Joep explains where he sees value, why he has a bias to riskier segments like high yield and why careful credit assessment and corporate resilience are key in maximising the opportunities in Asian debt.

“While our focus is naturally on other things right now, we should not forget that we still face challenges in areas like climate change and society in general,” says Senior Responsible Investment Specialist Petra Stassen. In this podcast we talked to Petra and her colleague Adrie Heinsbroek, Principal Responsible Investment, about our recently published Responsible Investing Report 2019. They discuss our role as an investor and our responsibility to put our clients’ capital to work in a way that fulfills their financial and sustainable ambitions. The report covers a range of topics – from the importance of financial materiality in ESG integration to the concrete results of our voting and engagement activities. What do our responsible investing experts regard as the highlights of 2019, and where will their focus be in 2020 and beyond?

Markets rebounded last week after central banks and governments took steps to limit the coronavirus fallout, but we are by no means at the end of the crisis, according to Ewout van Schaick, head of Multi Asset. Earnings estimates have probably not sufficiently priced in profit declines and changes in dividend policies are likely to be negatively received by the market. A real turn in the market will require a real turn in the problem – in the form of a new medicine or vaccine, or a at least some visibility that we will return to normality in the next few months, Van Schaick says in our latest podcast. “Until then it’s very difficult to see an end to the huge volatility in the market.”

Markets remain beset by turbulence as pundits offer wildly divergent predictions for the coming recession. With no clear endpoint in sight and no certainty as to which companies will survive the downturn, pricing in the recession is a formidable task for equity investors. Still, given that markets will likely price in a recovery before it becomes apparent in the real economy, the current environment may offer an attractive entry point despite short-term volatility. In our latest podcast installment, Maarten Geerdink, Head of European Equities, explains the importance of dedicated sector analysts and the benefits of taking a longer-term perspective during a crisis.

Uncertainties regarding the coronavirus – when the spread of the epidemic will slow and how long lockdown measures will last – are keeping financial markets under stress. The US government’s failure this weekend to agree on a stimulus package raises concerns about the country’s ability to fight the virus and its economic impact, but last week’s measures by the Fed and the ECB have helped stabilize bond markets, according to Ewout van Schaick, head of Multi Asset. “Investors who don’t want to put all their money in cash can allocate part of their money again in safe government bonds,” Van Schaick says in our latest podcast. “For more opportunities in the market, I think we have to wait until fiscal policy is helping out as well.”

Funding levels, asset allocation bandwidths, liquidity – all factors that concern pension funds in the current volatile market environment. Although it is difficult not to be affected by day-to-day developments, pension funds generally have long-term goals and strategic asset allocation plans that have been thoroughly stress tested. However, plummeting stock prices have caused many funds’ fixed income/equity balance to shift beyond their investment bandwidths. So should they be looking to buy equities and readjust their portfolios? Jeroen Wilbrink helps Dutch pension funds control their balance sheets and select investment opportunities. In our new podcast episode, he assesses how they can maintain a steady course through the ongoing crisis.

Financial market stress is mounting as the coronavirus continues to spread. With the fatality rate increasing in many parts of the world, governments are taking unprecedented measures, and the impact on companies around the globe will be huge. Will these measures work? How long will they remain in effect? The uncertainty these and other such questions create is reflected in the enormous jumps in recent market volatility, with intraday price movements of 10% almost every day. Ewout van Schaick, head of Multi Asset, advises investors to take a step back and not to panic. “We would definitely favour a wait-and-see approach,” he says in our latest podcast.

The past week has brought about the largest one-day correction in equity markets for more than 30 years. Central banks in developed markets are moving to stem losses and inject liquidity, but they have little ammunition left. With no certainty as to how long the outbreak might last, investors are seeking shelter in an ever-shrinking pool of creditworthy assets. In our podcast episode, Chief Investment Officer Valentijn van Nieuwenhuijzen discusses the levels of investor fear driving the sell-off, potential credit and equity opportunities, and where the markets could be heading next.