Barings Asset Management projected that the global economy will continue to grow next year without a recession.
Barings Asset Management, a subsidiary of the major U.S. life insurance company MassMutual, is a global asset manager that manages $470 billion (about 694 trillion won) in assets.
On the 15th, Barings Asset Management said the global economy will likely remain in a "Goldilocks" state next year despite policy shifts and geopolitical tensions. Goldilocks refers to a condition that is neither too hot nor too cold. In other words, it means steady growth without a recession.
Barings Asset Management said, "The U.S. economy will see some slowdown in growth due to the impact of high interest rates, but it is likely to avoid a recession," and added, "Europe is supporting growth through monetary policy easing, China is strengthening fiscal stimulus, and ASEAN and Latin America are benefiting from supply chain reorganization."
It emphasized that balanced global diversification is important in this environment. Barings Asset Management said portfolios need to move beyond a U.S.-centric approach and increase investments across Europe and emerging markets. It also said investors should take a long-term view that addresses structural trends, including artificial intelligence (AI).
It assessed that the bond market warrants attention to long-term rate volatility and credit rating improvements. In particular, global high-yield bonds are undergoing qualitative changes, with credit ratings improved compared with 10 years ago and shorter duration (interest rate sensitivity of bonds).
Martin Horne, co-head of global investments at Barings Asset Management, said, "Diversification is the most effective defense in an environment of policy uncertainty and high valuations," adding, "It is important to balance across styles, sectors, and regions, and there is particular reason to watch European and emerging market assets."