Socially responsible bonds are on the rise
Green and social bonds are selling like hot cakes. The market for socially responsible bonds has become more mature and there is no longer any question of a "greenium" or "green premium. Mark Van Assche, Private Banking and Wealth Office account manager, talks to Baptiste Mesot, Portfolio Manager at KBC Asset Management.

24-11-2023
07-12-2023
Economy
- Manufacturing is struggling globally, which is exerting pressure on industrial regions such as Germany and China.
- Business confidence in the service sector has been declining sharply, as well.
- The US economy is holding up slightly better on account of the continuing low level low of unemployment and solid retail sales, but some cracks are starting to appear there too.
Oil - inflation
- Inflation continues to fall steadily in both the US and Europe. Core inflation is also falling but is still too high.
- The trend, however, is moving in the right direction. The market perceives the slightest drop as particularly positive and a possible accelerated end to higher interest rates.
- In China, producer prices are dipping below zero and consumer price growth is fluctuating around that level, too. Oil prices are particularly volatile.
Fiscal policy
- The exceptional stimulus programmes are being scaled back, but there is no sign of savings drift.
- Programmes such as EU Next Generation and the Inflation Reduction Act in the US continue to be substantial and offer considerable support. China is also stimulating its flagging economy.
Monetary policy
- Central banks in the US and Europe have raised key rates at an unprecedented pace over the past 16 months in an effort to slow economic growth and cool inflation.
- The ECB and the Fed are both awaiting new data, but further rate hikes are not being ruled out. Even so, the markets seem to believe that the most recent increase was the last and are already looking ahead to a first cut in key rates. However, we do not expect that to materialise before the middle of next year.
Bond markets
- Interest rates would seem to have peaked.
- Investors are anticipating a fairly quick downward adjustment in the rate policy pursued by the central banks, although this implies that the economy will slow down more and inflation cool off further.
- Bonds climbed sharply, but even so, returns remain attractive.
Equity markets
- Quarterly figures are slightly better than expected in the US, but disappointing in Europe. Companies missing earnings expectations, however, have been severely punished by the market.
- In the meantime, sentiment has turned positive for the asset class, as inflation is on the right track and interest rates are falling again.
- Although the outlook for corporate earnings in 2024 may be slightly overly positive, the market doesn’t seem to be particularly worried about it for now.
What risks do we see?
- Oil prices are particularly volatile and have now started falling again. This is fuelling the current prevailing expectation of lower inflation.
- However, the conflict in the Middle East may continue to cause nervousness.
- Not an easy environment, therefore, for policymakers to take decisions on interest rates.
The direction taken by the stock and bond markets in recent weeks has been driven by long-term interest rates. Company results are painting a mixed picture. Stock markets quickly forgot the autumn dip.
Siegfried top, Senior Investment Strategist KBC Asset Management

Advisory texts
This web page is published by KBC Asset Management NV (KBC AM). The information and figures it contains are a snapshot, may be changed without notice and offer no guarantee for the future. The information provided should not be regarded as investment advice or as an investment recommendation. No part of this page may be reproduced without the prior express written consent of KBC AM. The information on it is governed by the laws of Belgium and is subject to the exclusive jurisdiction of its courts. Publisher: KBC Group NV, 2 Havenlaan, 1080 Brussels, Belgium. VAT BE 0403.227.515, RLP Brussels. www.kbc.be.