January 2021

At the beginning of February 2021, the financial markets are maintaining the cautiously optimistic stance that has dominated for three months now. 

Whilst this optimism has not produced a perfectly straight line, indeed it has meandered somewhat, the daily fluctuations have been driven by announcements of progress in vaccinating populations, the key factor in a return to normal for the economy as anticipated since the first vaccine was announced in early November. As a result we have recently seen a return of volatility, echoing the delays in the vaccine schedule. Meanwhile, central banks continue to act to support the return to normal, which could take shape in the spring.

Despite this somewhat laborious start to the year, the general tone is one of recovery: The International Monetary Fund now expects global growth of 5.5% this year, with figures of 8.1% in China, 5.1% in the USA and 4.2% in the eurozone. European economic data released recently has also been encouraging: inflation in Germany and Spain was well above expectations in January, helping reduce deflationary risk, whilst 4th quarter growth figures were better than expected in Germany, Spain and France. This reflects the adjustments made by households and companies to adapt their activities to mobility constraints.
Companies, which are just beginning to release results for the final quarter of 2020, are showing the benefits of these adjustments. Publicis, which is held by our funds, was able to capture advertisers’ investment in digital channels, on-line retail and direct sales to consumers. The resilience of its activity in the 4th quarter of 2020 surprised the market and the group expects an operating margin in 2021 above current market expectations. Richemont, which we also hold, the Swiss luxury goods group that owns brands such as Cartier and Van Cleef & Arpels, reported an increase in revenues in the 4th quarter, driven geographically by Asia and the Middle East (growth of 21% and 20% respectively) and more generally by stronger online sales (up 13%). Lastly, amongst mid-sized companies, Somfy, known for its automatic controls for openings and closures in homes and buildings
, saw revenue drop by 15.7% in the 2nd quarter, but despite this posted full-year growth of 6.1% thanks to a strong second-half recovery.

The risk now lies more in overoptimistic market expectations of the vaccine rollout, particularly its speed of execution and the recovery it will produce. For this reason we are making no plays on an imminent end to the health crisis, but each compartment of the SICAV – within the limits of its investment profile – is concentrating on stocks that we expect to make up lost ground (Page Group, Royal Dutch Shell, Total) and others that are more highly valued but offer dependable growth (Novartis, Worldline).
Even if the cycle proves more robust than expected, we will maintain our vigilance over share valuations and the resilience of business models.
Since the end of last year, the changes in value of the compartments of the SICAV remain minor, as with market indices.






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