Agefi Luxembourg - novembre 2025

Novembre 2025 23 AGEFI Luxembourg Fonds d’investissement T he rise ofAImarks a transforma- tive shift across industries, with finance at the forefront. The Eu- ropeanUnionhas led thewayby intro- ducing theworld’s first comprehensive AI regulation, the EUAIAct, published in July 2024 and effective since 1 August 2024. This regulation establishes a risk-based fra- mework for bothdevelopers andusers ofAI systems. In contrast, theUnitedStates has adopted amore frag- mented approach, combi- ning legislative initiatives, executive ac- tions, and aBill of Rights. Despite differing regulatory strategies, the shared objective remains clear: to set standards that address emerging andpotentiallyunmanageable risks asso- ciatedwithAI-drivenprocesses. These frameworks, still in their infancy, allowsignificant flexibility, par- ticularlyinthedevelopmentofpredictiveAImodels. Inthefinancialsector,suchmodelsleveragemachine learning to process vast datasets, identify patterns, and forecast outcomes such as market movements. This enables real-time, data-informeddecision-mak- ing, especially in volatile environments raising new questionsaboutthereliabilityoftraditionalvaluation mechanisms like Level 1 fair valuemeasurement. PredictiveAI-based trading Institutional investors, rating agencies, professional traders, andotherfinancialmarket participantshave long relied on algorithmic tools to automate finan- cial andcredit riskanalysis.Within the stockmarket, predictive AI-based trading tools go a step further by leveraginghistorical and real-time financial data to forecast price movements and market trends. However, the level of integration and precision we are witnessing todaymarks a significant evolution. The predictiveAI landscape in finance particularly in stock market analysis and trading has experi- enced rapidexpansionand is set for continued, sub- stantial growth. This surge is drivenby several key factors: - Thewidespread adoptionof algorithmic trading - Advances in computational power and machine learning techniques - The growing reliance of hedge funds onAI-driven strategies -Theincreasingsophisticationofquantitativetrading models - The accessibility of cloud-basedAI solutions Looking ahead, growth is expected to be fueled by a convergence of favorable conditions, including: -Supportiveregulatoryenvironmentsthatencourage technological innovation - Broader global adoption among retail investors -Continueddevelopmentandenhancementofcloud- basedAI services In parallel, companies are innovating with AI-en- hancedequitybenchmarks,aimingtooutperformtra- ditionalindexesbyoptimizingreturnsandmanaging riskmore dynamically. While these developments are already embedded in day-to-daymarketoperations,theirregulatoryimpli- cationsmaynotyetbefullycaptured.Financialanaly- sis and decision-making, on one hand, and financial reporting,ontheother,aretwosidesofthesamecoin. PredictiveAI not only enhances efficiency in the for- mer but is increasingly influencing the latter – raising important questions about how traditional valuation frameworks, suchasLevel 1 fair valuemeasurement, remain reliable in anAI-drivenmarket. “Activemarket” requirement under international accounting frameworks In financial accounting and reporting, market prices fromstockexchangetransactionsareaprimarysource for fair value estimations; an approach embedded in most globally recognized accounting frameworks. In2009, aiming toenhance transparencyaround fair valuemeasurements and liquidity risk, the Interna- tionalAccountingStandardsBoard(IASB)amended IFRS7–Financial Instruments:Disclosuresby intro- ducinga fair valuehierarchy. Thishierarchymirrors the structure used in US GAAP under ASC Topic 820(formerlyFASBSFASNo.157–FairValueMeas- urements). Under IFRS 7, financial instruments measured at fair value must be classi- fiedintothreelevelsbasedontheinputs used in their valuation: - Level 1 refers to quoted prices (unad- justed)inactivemarketsforidenticalassets or liabilities. - To qualify as Level 1, an instru- mentmust be: oQuoted in an activemarket o Valued at its unadjusted quotedpriceasofthereporting date o Based on prices that are readilyobservableandreflect actual, regular transactions conducted at arm’s length In essence, a Level 1 instru- ment is one that is openly traded, publicly accessible, and subject to frequent, unbiased transac- tionactivity.Theresponsibilityforensuringtranspar- ent and orderly trading lies with regulated market managementcompanies,typicallysupervisedbyna- tional authorities. These entities oversee the admis- sion, suspension, and revocation of financial instruments and operators, thereby safeguarding in- vestor protection. Fordecades,theprincipleofregular,unbiased,arm’s- length transactions has been the cornerstone of fair value measurement under the “active market” defi- nition. It has servedas a sine qua non condition for the validity of Level 1 estimates. Yet, given the remarkable progress in predictive AI technologies and the operational shifts they are driv- ingwithin regulatedfinancial markets, it isworth re- examining this foundational principle. Can we still rely on it as the bedrock of fair value measurement? Or do these technological advancements call for a re- evaluation of its relevance and robustness in today’s AI-driven trading environment? Risks in a rapidly changing environment The increasing integration ofAI-driven trading sys- tems is fundamentally reshapingmarket dynamics, raising critical questions about the continued rele- vance of assumptions embedded in established ac- counting standards. It is essential to assess whether the principle of “active market” can withstand the paceoftechnologicalchange,orwhetherupdatesare needed to ensure that fair valuemeasurements con- tinue to reflect truemarket conditions inanAI-dom- inated landscape. ThewidespreaduseofpredictiveAItoolsformarket analysis andexecution is transforminghowtransac- tions occur, especially in terms of volume and fre- quency.Machine-driventradescanartificiallyinflate transaction volumes over compressed or extended timeframes, potentiallydistorting thenatureofmar- ket activity. These surges may not reflect genuine shifts in investor sentiment or fundamental value, but rather the automated reactions of algorithms to data and signals. Asaresult,thetransparencyandinformationalvalue ofmarketpricesmaybecompromised.Stakeholders may find it increasingly difficult to distinguish be- tween authentic market trends and algorithm-in- duced fluctuations. The principle of “actual and regular transactions,” which underpins the definition of an active market, is closely linked to the concept of arm’s length trans- actions those conducted between independent, un- affiliated parties, each acting in their own interest. While AI-driven markets may still satisfy the “self- interest”criterion,theindependencebetweenparties becomesmore ambiguous. When trading decisions are guided by similar or even identical algorithmic strategies, both sides of a transaction may be operating under convergent logic. This homogenization of behavior driven by thewidespread adoption of comparableAI models canerode thediversityand independenceofmarket participants. Consequently,market activitymaybe- come less representative of a broad spectrum of views and interests. Conclusion As predictive AI continues to permeate financial market operations, its influenceon tradingbehavior, market structure, and price formation is becoming increasingly significant. This evolution challenges the foundational assumptions of existingaccounting standards particularly the definition of active mar- ketsunderpinningLevel 1 fair valuemeasurements. To ensure that fair value continues to reflect gen- uine, arm’s lengthmarket activity, it may be neces- sary for regulators and standard setters to revisit and update the criteria used to define active mar- kets. The traditional benchmarks based on regular, unbiased transactions between independent parties may no longer fully capture the realities of an envi- ronmentwhere algorithmic logic increasinglydrives both sides of a trade. EmanuelePOMPEI Partner,AssurancePrivateEquity LaurentCAPOLAGHI Partner,ManagedServicesandPrivateEquityLeader EYLuxembourg PredictiveAI trading: Implications for the “active market” criterion in Level 1 fair value measurement E mergingmarkets (EMs) are once again in the spotlight.Amid globalmonetary easing, a weakerUSdollar, and resi- lient domestic demand, the macro environment has tur- neddistinctly favourable for developing economies. According to the latest EmergingMarketsCharts andViews report (Amundi Investment Institute, October 2025), EMs are ente- ring a newcycle of opportu- nitydrivenby stable infla- tion, credible policy frame- works, and improving exter- nal balances. Macro Support Returns to the EmergingWorld The global economic cycle is now aligned to support EMoutperfor- mance. With the US Federal Reserve resuming rate cuts and inflation receding across major economies, liquidity conditions are improving. This is giving EM central banks greater policy flexi- bility to continue their easing and havingthejobdone.Amundipro- jects EM growth at 3.6 % in 2025, compared with 2.1 % for devel- oped markets, maintaining a growth premium above its ten- year average. Inflation remains contained, with most EMs demonstrating orthodox policy disciplineduringthe2022-23infla- tion spike.As a result, disinflation is proceeding smoothly without restrictive monetary policies undermining activity. A second structural factor is the renewedweakness of theUS dol- lar, which is alleviating financing costsandsupportinglocal-curren- cydebtmarkets.Thedeclineinthe dollar index to its lowest level since 2022 has boosted EM cur- rencies and contained imported inflation, reinforcing consumer purchasing power. Meanwhile, external resilience has improved markedly. EMs have accumulated larger foreign- exchange reserves, many now exceeding 100 % of the IMF’s adequacymetric, andhave shift- ed issuance towards local-cur- rency debt. This evolution reduces vulnerability to dollar swings and external shocks, a crucial differentiator compared with previous cycles. Investment Convictions Across EMAsset Classes Amundi’s investment stance across EM debt, equity, and cur- rencies reflects this improving backdrop and the diversification value thesemarkets provide. EMDebt –Attractive Yields and PolicyTailwinds With theFedeasingand local dis- inflation entrenched, EM fixed income remains one of the most appealing opportunities. Local- currency sovereign bonds offer both high carry and potential price gains as rates decline. Despite trending lower, EM yields remain compelling com- pared to less appealing DM yields. In many Latin American markets, real rates exceed 4 %. Corporateissuanceisbroadening, and technicals remain robust as inflows into EMdebt funds have accelerated sincemid-year. EM Equity – Valuations and Earnings Support EM equities continue to trade at substantialdiscountstodeveloped peers. The forward price-to-earn- ings ratio of the MSCI EM index stands near 11×, versus 18× for the MSCI World, according to Bloombergdata.Earningsgrowth remainspositive,withBrazil,India and Taiwan leading near-term expectations.Importantly,thesec- tor compositionof EMindices has evolved:technology,communica- tions, and consumer segments now account for nearly half of market capitalisation, reducing reliance on commodities and financials. Amundi’s strategists highlight Latin America, Eastern Europe and India as preferred regions, citing attractive valua- tions, easing cycle and robust fun- damentals. China remains amore nuanced case, with policy-driven stabilisationeffortsoffsetbylinger- ing overcapacity and weak prop- erty sentiment. EM Currencies – A Structural Regime Shift A broad-based dollar decline has allowed many EM currencies to post double-digit gains in 2025. The Mexican peso, Brazilian real and Polish zloty have all outper- formed, reflecting renewed investorconfidenceandimproved external accounts. Unlike in past cycles, EMFX is showing reduced sensitivity to US term premi- ums—asignthatlocalfundamen- tals and credible monetary regimes are asserting themselves. Diversification in a FragmentedGlobal Economy Amundi frames the current land- scape as part of the “Great Diversification”:astructuralrebal- ancing of capital and supply chainsamidgeopoliticalfragmen- tation. As global investors seek alternatives to US and European exposures,EMassetsstandoutfor theircombinationofyield,growth, and improving governance. ForLuxembourg-basedallocators, themessage is clear. The support- ive macro background, credible central-bank policies, and appeal- ingvaluationsacrosstheEMspec- trum argue for a renewed, selec- tiveapproachtoemerging-market exposure. In an environment where global growth is moderate andyielddifferentialsarenarrow- ing,EMsofferbothcyclicalupside and structural diversification— attributes increasingly scarce in developed-market portfolios. Alessia BERARDI, Head of Emerging Macro Strategy, Amundi Investment Institute Emerging Markets: AStrong Macro Backdrop and Convincing Investment Opportunities