In February, the financial markets continued to make up some of the lost ground of December 2018. Since the beginning of the year, the US S&P 500 and European Stoxx 600 indices have gained respectively 11.1% (3% in February) and 10.4% (3.9% in February). These figures reflect investors’ relief as the prospects of an abrupt increase in interest rates have dwindled alongside a lessening of the chances of a trade war between the USA and its trading partners and a completely disorderly Brexit. Now that these satisfactory shifts in outlook have taken place, it would seem likely that these same investors will turn their attention to the fundamentals of the economic context and at companies.
With this in mind, the expected deceleration of the global economy this year was confirmed by a number of signals drawn from the publication of 2018 figures. BASF is expecting the global economy to grow by 2.8% in 2019 (from 3.2% in 2018), with resilient industrial demand, and an increase of 2.7% in chemicals industry sales to serve this growth. Bobst Group, the global leader in packaging equipment, does not expect sales growth in 2019 and has observed a degree of caution in the investment plans of sector companies, traditionally considered as a significant lead indicator for consumer goods industries. In investment and industrial automation, Schneider Electric expects organic growth of between 3% and 5% in 2019, from 6.6% in 2018. Lastly, global trade is likely to provide less support to economic activity: Kuehne & Nagel expect freight volumes to grow by 2% to 3% this year, from more than 5% in 2018.
These signals call for vigilance and continued observance of our fundamental investment discipline with regard to the quality and valuations of the stocks selected. On a more tactical level, the good market performance since the beginning of the year resulted in us scaling back the equity exposure of the Rouvier Valeurs compartment from 87% to 82% using hedging derivatives.
The various compartments of the Rouvier SICAV produced respectable performances in February. Most notably, Rouvier Europe gained 4.5% and is now up 10.2% for the year to date. Although not fully invested, and with a more defensive stance, Rouvier Valeurs is nevertheless up 8.8% for the year to date (3.7% in February), with gains at its hedged version, Rouvier Évolution, limited to 5.8% (3.1% in February). Lastly, Rouvier Patrimoine was up 1.8% at end-February against a bond index just edging into negative territory.