Who
Amundi SA is Europe’s largest fund manager, overseeing a massive $2.1 trillion in assets.
Vincent Mortier is the Chief Investment Officer (CIO) at Amundi.
What
Amundi is warning that global stock markets are currently overvalued by around 20%.
The overpricing is attributed to people being too confident that inflation will stay low and having too much optimism about technology stocks.
Why
The overconfidence in low inflation and excessive optimism in tech stocks are driving this overvaluation.
Despite the potential for short-term gains, Amundi is avoiding investing heavily in big tech stocks.
How
The global stock market has experienced a significant increase, fueled by optimism about interest rate cuts and advancements in artificial intelligence (AI).
This has led to a substantial premium (almost 60%) for major technology stocks compared to the MSCI index for developed markets.
Concerns and Risks
Strategists at Bank of America and JPMorgan, including Vincent Mortier, are worried that the current market situation resembles the dot-com bubble from the early 2000s.
Mortier emphasizes that economic risks are not being considered enough in current stock prices.
Amundi’s Strategy
Amundi is not jumping into the big tech stock frenzy to avoid potential risks.
Vincent Mortier prefers stocks in emerging markets like Vietnam and India, along with European utilities, telecom operators, and banks.
Preferred Investments
Amundi likes stocks in emerging markets due to potential growth.
European utilities, telecom companies, and banks are considered attractive, even in the face of an economic slowdown, with dividend yields of around 7%.
Tech Sector Position
Amundi is maintaining a cautious stance (underweight position) on the technology sector until stock valuations become more realistic.
Mortier believes that, eventually, the actual performance and value of tech stocks will align.
Predictions
Vincent Mortier anticipates a correction in the market, expecting it to happen over “some months.”
Investors may take advantage of market dips in the short term to improve their positions.