Our Investment Strategy Recommendations For September

A combination of negative factors have weighed on bond markets, taking the historic fall in interest rates to new lows. Factors include trade tensions between China and the US, which are not expected to be resolved in the short term, but also an increasing likelihood of a hard Brexit, Argentina's debt default, and political tensions in Hong Kong.
Nevertheless, the impact of this flight-to-quality movement has not been particularly reflected on stock markets, because the decline has not been exceptional.

Fundamentals continue to deteriorate: less economic growth expected, profit increases
revised down, political risks still present. We remain negative on risky assets in the short term.

We are neutral on long-term equity markets as we feel the risk/reward ratio is
unfavourable. If everything goes according to our base-case scenario (moderate economic growth including in the eurozone, a small rise in profits in 2019 and 2020, very low interest rates historically and without any future shocks as inflation remains low) stock markets will remain at their yearly highs but will struggle to continue to rise due to a lack of catalysts. On the other hand, the risk of a fall is greater if one of the risks materialises.