Furthermore, French President Emmanuel Macron briefly put on his French emperor’s outfit, by casting doubt, through a leak to the press on Thursday, about the possibility of a refusal to postpone the date from 29 March, which would see the British unceremoniously ejected from Europe. In the end, the Europeans figured out a system that gives the United Kingdom until 12 April to make up its mind and shoulder responsibility for a “no deal” Brexit. In a nutshell, then, there are still a few weeks to wait before we will know the outcome of these negotiations that have lasted three years. This will undoubtedly mean more volatility in the markets, which have been less favourable in the past few days.
Recent erratic fluctuations on long-term rates may reflect a certain amount of nervousness. However, M&A transactions have rebounded (Worldpay, Inmarsat, etc.). Indicators show that the pace of global growth has picked up again, especially in the eurozone and emerging countries.
The United States, still troubled by the climate of the first quarter, looks set to continue reaping the rewards of solid growth. Although profits have been revised downwards on both sides of the Atlantic (growth in profits for 2019 forecast to be +4% over the year for the S&P 500 and +7.6% for the Stoxx600), the equity markets continue to offer the best exposure to global growth, technical innovation and yield, particularly in Europe where equity indices are paying between 3 and 4%.
Whilst for many months, investors have pounced on defensive and protective strategies, at the beginning of this year, the equity markets are once more illustrating that it is at times of crisis and sharp drops in indices that we need to rediscover a taste for risk and taking action…a bit like Napoleon who, ten years after the tumult of the French Revolution in 1789, seized his opportunity and rebuilt one of the biggest European empires seen since Charlemagne.
Igor de Maack, Fund manager and spokesperson at DNCA. This article was finalised in March 22nd, 2019.
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