Allianz GI: How Uncertainty Generates Opportunities

The factors of uncertainty that loom over the world of investments can be opportunities for returns , provided that one has the appropriate skills to recognize the fundamentals within the short-term turbulence. This is how the message that emerged from the Media Days organized by Allianz Global Investors in Frankfurt can be summarized.

Opportunities in Europe, despite many unknowns

2025 is characterized by a very high level of global economic uncertainty , comparable to that of the pandemic. Geopolitical tensions and the trade war between the United States and China are weighing on global growth, underlined Stefan Hofrichter, head of global economics & strategy of the asset management company, who highlighted how this combination of factors creates the conditions for a slowdown in global growth. In this context, Europe is expected to see GDP growth of less than 1% , with household consumption oriented towards caution.

Pushed by the ECB

On the positive side, the experts at Allianz GI explained, the Old Continent is adopting expansionary fiscal policies , especially through investments in infrastructure and defense, which should support structural growth in the coming years. The ECB's attitude , more oriented towards accommodating monetary choices than the Fed, contributes to seeing the glass half full. In light of this scenario, the indication is to focus on a portfolio rotation towards European equities, which comes from years of underperformance compared to US indices and therefore presents lower multiples. Allianz Global Investors believes that the rotation towards Europe is only just beginning and that there are still investment opportunities, also thanks to an improvement in long-term growth prospects.

The selection wins

The orientation of money managers is however to avoid directional choices, preferring a defensive, selective and long-term positioning, with a focus on companies that have robust fundamentals and guarantee geographical diversification of the business. The lower concentration of stocks in the main European indices reduces specific risks compared to the US market, dominated by the so-called "Magnificent 7", recalled Christoph Berger, CIO Equity Europe of Allianz Global Investors . Who focused on the sectors that can benefit most from the underlying framework. From defense to electronics, from industry to construction. Banks deserve a separate discussion, which in recent years have carried out a thorough cleaning of their balance sheets and today benefit from the growing demand for loans.

“Europe is strengthening its sovereignty in strategic sectors such as defense , cybersecurity , artificial intelligence and advanced technologies ,” Berger added. He recalled in particular that Germany has almost half of the leading companies in little-known market niches.

In favor of European equity, it was reiterated during the Media Days, there are also the measures adopted in recent times to reduce bureaucracy and stimulate innovation . Thus, companies in the area are well positioned to seize the opportunities offered by the adoption of artificial intelligence.

The speed of change

Beyond the Eurozone, Allianz GI also sees yield opportunities in emerging debt, with the outlook presented by Carlos Carranza, edm portfolio manager , and Giulia Pellegrini, lead portfolio manager , who emphasized the importance of being able to read the changes, which are increasingly rapid and violent.

Finally, there is no shortage of opportunities in private debt , as noted by sector manager Raluca Jochmann . She highlighted in particular the opportunities in the infrastructure segment, characterized by significant cash flows, a tendency to be linked to inflation and limited volatility. “Over the last ten years, the infrastructure market has grown more than three times faster than the rest of private equity,” added Jochmann . Recalling that around the world there are many institutional investors looking for opportunities outside of regulated markets.