The firm sees attractive opportunities in 2024 in longer-term strategies in sovereign debt, investment grade corporate bonds, private markets, and themes related to the energy, technology and trade transitions.

Its central scenario for next year is for more moderate economic growth and falling inflation to open the door to a gradual decline in interest rates.

Madrid, 30 November 2023.
Santander Wealth Management & Insurance, which includes the bank's private banking, asset management and insurance businesses, believes that for the coming year investors should consider strategies beyond the short term to complement the safe haven currently offered by money markets following recent increases in official interest rates. “We believe it is necessary to combine this approach with strategies that enable us to extend these returns over a longer period of time,” says Victor Matarranz, global head of Santander Wealth Management & Insurance, in his cover letter to the Market Outlook 2024, entitled Extending the Investment Horizon.

The firm identifies several options that may represent attractive opportunities in 2024, such as increasing duration in sovereign bonds and stepping up exposure to investment grade corporate bonds. “Outside government bonds and money markets, there are other assets with moderate credit risk and trading at reasonable valuations that represent attractive investment opportunities, such as investment grade corporate bonds. This makes it possible to construct balanced investment portfolios with a better risk-return profile than in recent years,” says Víctor Matarranz. The firm believes that this is an excellent time to build diversified portfolios, given the high yields available in both rate-sensitive assets (government bonds) and cyclically sensitive assets (corporate bonds and equities).

For more sophisticated investors, Santander Wealth Management & Insurance points towards private markets, which are outperforming and can be accessed through a growing range of alternative investment solutions such as private equity, infrastructure, private debt, and venture capital. It also advises taking positions in themes linked to the energy, digital and trade transitions to achieve differential returns over the long term. Those themes include notably the energy transition and the decarbonisation challenge, generative artificial intelligence and the drive for global productivity and new trade flows (friendshoring and nearshoring). The report also notes that equities are becoming more attractive as doubts about the cyclical adjustment of earnings begin to fade.

The firm's central macroeconomic scenario for 2024 is for economic growth to remain in positive territory (but more limited, yet avoiding a global recession), inflation to ease (but remain high), and interest rates to start falling (gradually). Santander Wealth Management & Insurance believes that central banks worldwide (with exceptions such as Japan and China) have raised interest rates to very restrictive levels that should be sufficient to moderate inflationary pressures. “This change in the monetary policy stance is possible thanks to the confirmation that inflationary pressures are easing,” says the report.