Our investment strategy recommendations for January by Florent Brones
Towards a better trend in stock markets in 2019/2020
A review of 2018: a difficult year for risky assets due to political risks. In December there was an acceleration in the fall in equities, above all in the US, particularly in the wake of the partial government shutdown and doubts surrounding the Fed’s monetary policy.
Our base scenario for 2019 continues to favour risky assets as fundamentals are still positive. We exclude the risk of a recession because domestic demand remains solid. Profits continue to rise, albeit more slowly, especially in the United States and interest rates are historically very low as inflation remains timid. The upward multi-annual trend in stock markets is not called into question simply on the basis of the 2018 decline. But volatility will remain high at the end of this stock market cycle.
Our regional equity recommendations remain unchanged for the eurozone and Japan (we are positive). We are neutral on the United States, United Kingdom and Switzerland. Within the eurozone, we focus on cyclical sector bets (banks, materials, oil, industrials, energy, telecom equipment) and the very late "Value" theme. We have reinforced the defensive aspects of our recommendations by becoming buyers of the pharmaceutical sector. Since October, we have been positive on emerging markets with a preference for Asia ex Japan.