Our Fixed Income Top Picks
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Our Equity Top Pick List
We have updated our Equity Top Pick List to reflect the events of the past quarter. The list includes those stocks, typically US and European ones, that we consider to be proper investment choices from a fundamental point of view. It can provide a starting point for building a sector-diversified equity exposure in portfolios, but can also be used as a watch list. Technical analysis should be used to time / determine the specific investment decision.
Could the momentum return in the semiconductors?
The semiconductor sector has had a challenging quarter, with its performance in recent months lagging behind improvements in underlying fundamentals, even as AI-driven demand remained exceptionally strong. The accelerating adoption of AI by enterprises and the proliferation of AI agents are significantly increasing the demand for computing capacity, which points to a further surge in cloud services and data center investments. Given current supply constraints, record-high backlogs, and higher-than-expected investment needs, we expect further upward revisions to earnings forecasts in the semiconductor industry. Nevertheless, the sector’s valuation appears favorable from a historical perspective, which, in our view, could result in a more attractive risk-return profile in the coming months.
Developments over the past two weeks have demonstrated that geopolitical and inflation risks have not disappeared. Nevertheless, yields in both the euro area and the United States are currently within what we consider to be reasonable ranges. Our latest selection features bonds that may offer attractive risk-adjusted return potential as part of a suitably diversified portfolio.
Until the first week of July, oil prices had normalised significantly, materially easing inflationary pressures and potentially increasing the appeal of longer-duration bonds. Yields in both the United States and the euro area are currently within what we consider to be reasonable ranges. However, recent developments in the Middle East suggest that the US–Iran ceasefire remains rather fragile, potentially leading to renewed volatility in both oil prices and bond yields. Nevertheless, corporate bond yields have returned to near-historical lows.
Euro-Denominated Corporate Bonds
The conflict involving Iran caused only a temporary spike in corporate bond yields. By the summer, yields had returned to near-historical lows as investor risk appetite recovered. Developments over the past two weeks have yet to result in any material change in this picture. Euro-denominated high-yield (HY) bonds continue to offer only a minimal yield premium over investment-grade securities. The additional credit risk should therefore be carefully assessed when selecting individual bonds.
Dollar-Denominated Corporate Bonds
Our selection of US dollar-denominated bonds includes several regional corporate issuers. Two OTP bonds are featured: subordinated instruments maturing in 2033 and 2035. The list also includes bonds issued by two Turkish companies, as well as a Telekom Srbija bond. Among US issuers, our current selection features one bond each from Amazon and United Airlines.
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