With the MSCI Europe Net up 6.7% at 30 June (compared to 6% at 31 March), and the MSCI World Net up a smaller 2.3% in euros (vs. 4.9% at 31 March), the equity markets slowed their pace in the second quarter compared to the buoyant momentum earlier in the year.
This slowdown can be attributed to the downward revision of expectations in the United States due to doubts about President Trump’s ability to carry out his programme, as well as to the lateral consolidation of the European markets after the palpable relief over French election results. In contrast, the markets were unruffled by the outbreak of rivalry between Saudi Arabia and Iran via Qatar, which demonstrates that structurally the oil environment is having less of an impact on market fluctuations, and that cyclically there is no downward tropism so far.
The first piece of good news of the first half is the confirmation of the European recovery, with annual GDP growth now estimated at between +2.5% and +3%, twice as high as the consensus just a year ago. Bank lending, to both companies and households alike, is at the highest level since 2008, which bodes well for the rest of the year. The second piece of good news is the convergence towards 2% of the Fed’s and the ECB’s inflation targets.
Our SICAV’s equity compartments have performed well in this environment, with first-half gains of 5.7% for Rouvier Valeurs (up from 4.5% at 31 March), and 6.1% for Rouvier Europe (compared to 5.4% at 31 March). Rouvier Europe’s performance reflects a 2.2% loss on its holding in Banco Popular. The terms of the expropriation in favour of Santander are being challenged in court, and we have joined the lawsuit.
Rouvier Évolution gained 2.8% (2.3% at 31 March). Its systematic hedging has been costly so far this year in the midst of low volatility, but it will be invaluable if volatility picks up.
Rouvier Patrimoine (+0.9% at 31 March and +1.7% at 30 June) fulfilled its preservation mission with a deliberately limited equity component at 18.6% (19.1% at 31 March), and a bond strategy that will enable it to face up to an increase in interest rates, which the consensus forecast now expects to occur soon.