Bank of France releases global allocation strategy: bullish on Chinese assets and US industrial stocks, shifting towards value and commodities.

Notice that France's Industrial Bank's global asset allocation team is currently leaning towards a market shaped by the following factors: lagging central banks' actions, increasing infrastructure and artificial intelligence (AI) capital expenditures, inflationary pressures brought about by investment spending, and rotation towards value stocks. The institution has listed seven core strategies: The first proposition is that most central banks will increasingly adopt policies that lag behind economic conditions. Their recommended investment execution plan includes: going long global stocks relative to global bonds; going long equally weighted indices such as the S&P 500; going long US inflation-resistant bonds; and shorting 10-year US, Japanese, and German government bonds. The second proposition is to hold beneficiaries of infrastructure and AI capital expenditures. Targets listed by BNP Paribas include: going long US industrial stocks, going long US and Eurozone utilities stocks, going long global oil and gas equipment and services, and going long their global nuclear energy basket of stocks. The third proposition is that infrastructure capital spending will drive inflation and benefit commodities. Execution plans include: going long commodities, going long copper, going long commodity currency against the euro, going long global metals and mining stocks, and going long the FTSE 100 index. In the fixed income area, BNP Paribas suggests rotating within this asset class, including: going long emerging market local currency bonds, going long US 2-year/5-year Treasury yield curve flattening trades, and going long 5-year/10-year German Treasury yield curve steepening trades. In terms of emerging markets, the institution recommends continuing to focus on value investing, recommending trades such as going long Chinese stock assets, going long the renminbi against the dollar, increasing holdings in Czech and Polish bonds, and allocating to Brazilian interest rate products. BNP Paribas also recommends buying some lagging stocks and selling some leading stocks at high levels, including: going long Indian stocks, shorting global emerging market stocks, going long US and Eurozone bank stocks, and going long US consumer discretionary stocks. Their final proposition is to invest around the theme of "strategic autonomy," including assets benefiting from manufacturing reshoring, European strategic autonomy, and China's next-generation leading enterprises.