« We will sail with more storms, but that does not mean that we will face terrible hurricanes. »

« We will sail with more storms, but that does not mean that we will face terrible hurricanes. »

« We will sail with more storms, but that does not mean that we will face terrible hurricanes. »

After welcoming the guests – over 500 clients from nearly 50 different countries – Mr. Perrier reviewed Amundi’s recent performance.

The integration of Pioneer Investments has been completed, strengthening Amundi’s alpha management expertise and distribution capacities, especially in Europe and the US. Amundi is now the undisputed European leader by size, profitability, and market cap. It has a strong presence in each Eurozone country. It is first in France, second in Italy, Austria and the Czech Republic, and the second foreign asset manager in Germany.

Amundi’s activity in Asia is also growing rapidly, with 200 billion euros under management, cementing its position in the Top 10 worldwide. Its ambition is to become one of the top five asset managers, stated Mr. Perrier, building on three criteria: high quality expertise and services, dynamic development, and commitment to responsible investment.

GEOPOLITICAL TENSIONS ARE ON THE RISE

Turning to the Forum’s theme of long-term thinking, Mr. Perrier underlined that while the economic environment is improving, mounting geopolitical tension and significant long-term challenges require vigilance and in-depth analysis.

The world economy is facing both new and traditional uncertainties, but they are limited compared with the growing geopolitical risks. Harking back to last year’s Forum he said, “I would say that a number of risks we had identified have materialized“.

Headlining the risks is the new foreign policy of the US, with the Trump administration withdrawing from several multilateral agreements. Secondly, while economic growth is solid in Europe, there are strong divergences about the rise of populism and defining a common future. “Will Europe as a whole be a political power or not ? That is the key question,” asked Mr. Perrier.

Some may have thought that the “end of history” had come with the downfall of communism, but now “history is back”. New powers such as China, India, Russia, and Turkey are emerging and the US has retreated to an “America first” stance, creating a more fragmented world.

However, western countries have not lost their power, they are simply forced to share it. At the beginning of the eighties the US and Europe represented 20% of the world population and more than 50% of world GDP, but now it is only 10% of the population and one third of GDP, detailed Mr. Perrier. The world has become multipolar and its centre of gravity is moving from the West to the East, and the institutions built in the previous world are less fitting for the new reality.

UNIVERSALIST DREAMS HAVE DISAPPEARED

For centuries of Western domination, the models supposed to give birth to a peaceful, harmonious, or simply controllable world were three: the balance of forces (bipolarity), dominance (peace by the empire), or cooperation (negotiation of a common order). These models were revisited in the early 1990s, following the downfall of the USSR and of the old communist world. International cooperation increasingly aspired to multilateralism, justified by the existence of ever greater commonalities: the limits of the market, the ways to overcome unemployment, the role of the state, the climate challenge, or the eruption of digital technology.
However, the weaknesses of the Western world (inequalities, globalisation, and crises) the emergence of new powers (China, India, Russia, Turkey and Iran, among others), and the shortcomings of multilateralism have altered the picture. The world of power is back after two decades of universalist dreams, where power struggles seemed to be fading through globalization and accelerating trade. But the new world is a divided and fragmented world, whose organizational logic is often difficult to detect or understand. Everything will depend on the articulation between transnational dynamics and nationalist dynamics. Democracies are under scrutiny and global trade is at risk again.

AMUNDI CAN WEATHER THE STORMS

Amundi is designed to follow these global trends, Mr. Perrier assured. With investment platforms in important financial centres around the world and a commercial presence across Europe, Asia and the Middle East, Amundi understands global client needs and evolving trends.

Moreover, over the past two years, global growth has remained solid and no major country has experienced negative growth, he pointed out. This has been driven by robust private consumption, the recovery of global trade, increased business investment and, in some countries like the US, a pro-cyclical fiscal policy.

However, favorable growth is mitigated by two threats to the global economy: a dramatic rise in debt since the 2007 crisis and a potential rise in inflation. Debt has not only fuelled GDP growth but also asset prices, which cannot continue forever. Meanwhile inflation is back, with tighter job markets and a concomitant increase in wages. Protectionist tensions could further reinforce inflation fears.

However, problems can be avoided if central banks smoothly recalibrate, preserving prices, macro financial stability, and their own credibility. They have already started a “friendly normalisation that financial markets look on with kindness,” said Mr. Perrier. Even if quantitative easing (QE) programmes gradually disappear, interest rates should remain low.

For asset managers, however, low inflation and low interest rates exacerbate the search for yields. The main risk is to simultaneously deal with low inflation, low interest rates, and rising debt, while growth is declining. To counter this, diversification is key, and it can be done through traditional and alternative  asset classes and especially through real assets. In addition, alternative investment processes, such as Smart Beta, factor investing, and playing on disrup-tions and megatrends can help. Socially responsible investment is another answer.

ESG INVESTING IS THE RIGHT AND PROFITABLE THING TO DO

“Amundi has set ESG as a key element of its DNA”, embedding it in its mission both for investors and society at large, underlined Mr. Perrier. It was first among major asset managers to include ESG analysis and is the leader in Europe with 250 billion euros under management. Amundi considers the responsibility of economic and financial players as a natural counterpart of their increased freedom. Corporates must create value for their shareholders, but they also need to consider the interest of society. There is no contradiction between financial performance and ESG performance. In fact, when product differentiation is less decisive, brand differentiation becomes more important. Amundi’s approach to ESG integration is not pointing and shaming, but relying mostly on overweighting or underweighting assets, rather than excluding them.

« Our ESG strategy is not an ideological approach; it is an approach of responsibility. »

« Our ESG strategy is not an ideological approach; it is an approach of responsibility. »

 

GREEN BONDS AND THE ENERGY TRANSITION

Amundi develops three types of innovative solutions to finance the energy transition and fight global warming:
• A Green bond strategy financing key players of the energy transition. 
• An Impact Green bond strategy financing green projects and engaging green bond issuers on environmental disclosure. 
• An Emerging Markets Green bond strategy financing the energy transition in emerging countries by bolstering both supply and demand of Green bonds.