At a media event yesterday, with concerns over soaring inflation rates abating, Henrietta Pacquement, senior portfolio manager and head of global fixed income at Allspring, outlined opportunities in the investment grade space in the first half of this year, saying it is in the "sweet" spot. 

The asset class provides income and quality, she said, and benefits from the higher interest rates. “The global outlook for bonds is also more positive,” she added. 

In the back end of the year, the asset manager believes that there will be increasing opportunities in equities, with the 60:40 equity/bond approach to asset allocation, which suffered last year, potentially making a comeback.

Emerging markets
At the event, Alison Shimada, San Francisco-based senior portfolio manager and head of total emerging markets at Allspring, singled out the value of investing in emerging market equities. 

With China easing its zero-Covid policy and re-opening its markets faster than expected to reach the 4 per cent growth in 2023, she feels positive about opportunities in the region and in emerging markets in general. 

Despite the conflict between China and Taiwan, she doubts that there will be an invasion, believing that the two countries will become closer. 

Common ground
Shimada also thinks the US and China have found some common ground on environmental issues and is hopeful that the two sides will move forward, despite the trade tensions.

Last year, the firm was underweight in China but it is now slightly overweight in the country. Shimada sees investment opportunities in tech companies, consumer staples, energy and financial firms, and believes that low-end staples and high-end luxury goods will do well in 2023. 

This was echoed by Zhixin Shu, a senior equity analyst with asset manager J Stern & Co. 

“During nearly three years of Covid restrictions, Chinese consumers have accumulated significant excess savings,” Shu said. 

“The luxury goods sector will be a major beneficiary of these excess savings. Pre-pandemic, Chinese consumers accounted for a third of the global luxury goods consumption and most of the growth,” she continued. 

“Covid restrictions, both within China and in international travel, had significantly reduced Chinese consumption of luxury. But that is all set to change. We expect significant pent-up demand for luxury goods from Chinese consumers this year, potentially more than offsetting the possible slowdown in demand in the West,” Shu said.

Good as gold
Shimada thinks gold’s appeal could also increase. Stocks that Allspring is invested in include household names such as Tencent, TSMC and Samsung and e-commerce giant Alibaba.    

Shimada said she thinks that India and South Korea also present investors with a good long-term investment opportunity. The firm's investment outlook is due to be officially released later this month.