In December, the European equity market resumed its upward trend (+2.8%) while U.S. indices denominated in Euro declined slightly again: the S&P 500 showed -1.1% and the Nasdaq -1.6%.
The year 2025 will be remembered as a good vintage for Clartan in a context of a bullish European equity market. However, it was not without turbulence as the arrival of President Trump and the impact of his new tariffs announced on April 2 caused initial panic among investors, before the situation quickly calmed thanks to a recalibration and renegotiation of these tariffs. Moreover, these tariffs did not trigger the recession many feared, as the economy is supported by a significant global investment cycle in infrastructure related to artificial intelligence.
The outlook for 2026 thus appears relatively clear. The U.S. midterm elections, scheduled for November 2026, are already on the horizon and will now neutralize any desire for “disruptive” reform from a White House that will no longer be able to “play cowboy.” In Europe, the macroeconomic situation appears stable despite difficulties in France and Germany. The French budget deadlock satisfies no one but at least prevents major harmful decisions, such as a massive tax increase, from being implemented. On the German side, the Merz government seems to struggle to carry out its investment program, hindered by the effect of its coalition. Elsewhere, the situation appears rather positive.
If there is one factor that should concern us about the future of the global economy, it is rather on the side of China that our attention should be focused. The trade war with the United States has indeed forced Xi Jinping to take drastic retaliatory measures such as a rare earth embargo, which threatened to halt automotive supply chains. Military tensions around Taiwan, the global semiconductor capital, continue to rise as the Chinese military modernizes and increases its capabilities. The industrial machine of the Middle Kingdom is running at full capacity and now directly competes with countries that believed themselves protected by their technological lead, such as Germany or Japan. China’s trade surplus is breaking record after record, and exports destined for the United States, blocked by tariffs, are now being redirected to Europe and especially emerging countries. With 35% of global manufacturing output for only 10% of consumption, it is highly likely that this mercantilist expansion will not be sustainable for its trading partners for long, and a series of protectionist measures, like those recently taken by Mexico, will follow in the near or more distant future.
Thus, we believe that 2026 and the following years will see the continuation of this trade war until China rebalances its supply with its domestic demand, willingly or by force, and only God knows how this will end. Let us simply hope that the necessary economic rebalancing occurs without too much collateral damage and, above all, without escalating into a military conflict, which would be catastrophic for the entire world.
The Clartan funds showed mixed progress in December. Valeurs rose by 2.8%, Europe by 1.1%, and Ethos by 1.9%. Patrimoine rises by +0,2 %, Flexible by +0,4 % and Multimanagers by +2.1 %.