April 2017

First-quarter earnings reports were in line with or higher than expectations for the most part, and as usual, they shed informative light on economic activity in early 2017.

Demand for specialty chemical products is a good indicator of industrial activity. BASF reported organic growth in volume of 8% compared to Q1 2016 (which in turn was a 3% increase on Q1 2015). BASF notes the robust rebound in Asia and the stronger increase in demand in Europe than in the United States.

As to investment, Schneider Electric, which is highly dependent on this factor, reported organic growth of 3% (vs. 1% in Q1 2016), including +2% in North America, +3% in Europe and +5% in the rest of the world. Industrial activity rose 5.5%, fuelled by China, and without a notable recovery in the United States, even though oil sector sales stopped declining. The building activity increased 3.8%, thanks to a strong performance in the US residential market and a recovery in Europe.

We would also like to highlight two more general indicators:
- The upturn in maritime shipping reported by Kuehne & Nagel (+4% in Q1 2017 vs. +1% in Q1 2016).
- The strength of billings for temporary employment services reported by Randstad: +6.4% based on business days (including +1% in North America and +8% in Europe), compared to +5% in Q1 2016 (including +3% in North America and +6% in Europe).

These indicators point to a scenario in which the revival of the emerging market growth engine combined with the European recovery, which is just getting underway, would act as support factors for global growth, taking over from the US economy, which is in a more mature cyclical phase. This is a favourable scenario for the equity markets, which have posted strong gains since the beginning of the year: the MSCI World Net and MSCI Europe Net are up 4.6% and 7.7%, respectively.

Our equity funds outperformed these benchmark indexes, with Rouvier Valeurs up 6.5% and Rouvier Europe up 8.9% at the end of April. Rouvier Valeurs’ qualitative position in a picky market and its deliberate overweighting in European stocks played in its favour, while Rouvier Europe’s strategic positioning in companies most likely to benefit from a European recovery – which continues to be confirmed – has generated alpha.

In a market environment that is not very volatile for the moment, and which makes hedging more costly, Rouvier Évolution nonetheless reported a gain of 3.7%. As to Rouvier Patrimoine, the strong performance of the equity component, which was deliberately held at 18% of the fund, enabled it to gain 1.2%.


Monthly Factsheet