Equity markets did well again in October, with the European index posting gains of 11.7% for the year to date (from 9.5% at end-September) and strong progress from the global index in euro terms, helped by the stabilisation of the European currency (+7% at end-October, from +3.5% at end-September).
This good performance came in defiance of political upheaval, such as the issue of Catalonia, and above all reflects the good health of the global economy, something borne out by quarterly figures from BASF, our traditional barometer of global industry. The company saw sales growth of 9% relative to Q3 2016, with 4% in the form of volume (or demand) effects. It has raised its economic forecasts for 2017 and now expects global GDP to grow by 2.8% (from 2.5% predicted in June), with industrial output up 3.1% (from 2.5%).
At a time when everything appears to be going well, it is only natural for investors to ask if the situation will last, a question answered in the affirmative to some extent by two factors revealed in recent quarterly figures:
- Healthy levels of investment, as shown in figures from Schneider Electric, particularly in industry (+6.9% for the automation division) and construction (+4.3% in the low voltage division), and to a lesser extent in infrastructure (+1% in the medium voltage division) which has been held back by thrifty government spending.
- Strong growth in global sea freight, revealed in figures from Kuehne & Nagel, which reported volume growth of 8% in a market that grew by between 4% and 5%.
Against this background we would note the good performance of Rouvier Valeurs, which is up 11.7% since the beginning of the year and gained 2% over the month, with its equity exposure scaled back to 83.4% (from 84.5% at end-September).
Rouvier Évolution, which is up 6% for the year to date following its 1.5% gain in October, benefited during the month from the gains of its equity portfolio and a lower cost of hedging relative to previous months.
Rouvier Europe has gained 9.3% since the beginning of the year, but still has a certain “performance reservoir” thanks to its financial positions. These positions are waiting for the completion of regulatory negotiations between the USA and the rest of the world (the so-called Basel III banking regulations), for the end of the cycle of US fines that began following 2008 and for the expected beginnings of an increase, however modest, in interest rates.
Rouvier Patrimoine is now posting a gain for the year to date of 2.3% and remains true to its capital protection goals, with an equity component that is deliberately restricted and indeed has been trimmed from 18.7% to 18.4%.