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BNPP AM Asset Allocation Outlook December 2019


BNP Paribas Asset Management

2020 Outlook: cautiously constructive, consciously reactive

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  • Global growth converging towards trend – slowdown to persist in 2020, but US growth should outperform Europe and Japan.
  • Central bank policy to remain easy – the room for further easing looks limited in Europe and Japan, but there is more scope in the US and China if needed.
  • Fiscal policy could be a game changer – US and Chinese policies are already expansionary, but the hurdles for European fiscal stimulus are high.


  • ‘Fragile goldilocks’ holds – data are stabilising, central bank policy is loose, and short-term de-globalisation dynamics are supporting risky assets.
  • Beware the risks – after a strong 2019, our base case is vulnerable to a more entrenched ‘synchronised slowdown’ or a sustained ‘reflation’ environment.
  • Fixed income is most at risk – we see fixed income markets as being most at risk from a sustained move to reflation.


  • Modus operandi: nimble & diversifying – strategic risk/reward is unattractive as our base case is also vulnerable to tail risks/end-cycle dynamics. We see merit in a nimble approach and in building robust portfolios/diversifying.
  • Overweight equities – in the latest dip, we added overweight positions in equities again, and aim to remain nimble.
  • Underweight core EMU duration – we aim to be nimble and have reduced our short exposure given yield moves. But risks from reflation remain large for rates.
  • Search for yield – we still believe in searching for yield. We are maintaining a high-carry EM external debt position and an EMU REITs trade.

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