Vincent Guenzi, strategist at Cholet Dupont, sees two military outcomes to the conflict: “ a quick surrender of Ukraine or a stalemate even in the event of the overthrow of the current government. The scenario of an extension of the conflict is unfortunately possible given Putin’s psychological profile, but this eventuality seems very unlikely given the risk of a global explosion that it would entail. One can hope that China, no doubt well aware of Putin’s plans, would use its influence to moderate him.. »
At the economic level, the sanctions regime could worsen and last, with the consequences of an inflationary risk and further disruptions in supply chains which lead to production stoppages in several sectors. Corn ” growth in developed countries will slow without falling back into recession if an embargo on Russian oil and gas is not adopted. On the other hand, in the event of a break in energy deliveries, it seems difficult to exclude the risk of recession in Europe. »
A more cautious general feeling
As a logical consequence, caution prevails in the markets even if pessimism is not omnipresent. ” The analysis of the risk premium leads us to conclude that the stock market indices do not yet fully factor in a high risk of recession, even if in fine this did not take place. Moreover, the geopolitical situation does not seem to be able to calm down in the short term. This is an essential condition for a lasting turnaround in stock market indices. In this troubled context, this expert recommends caution and a wait-and-see attitude. “It is premature to strengthen its equity positions globally. »
Vincent Guenzi slightly lowered his exposure to equities from 49.5% to 48.3%, while remaining neutral in the short term. In the medium term, an overweight remains in order, with an emphasis still on the United States and Europe. Over these two periods, Eastern European equities are underweighted. In fixed income, European government bonds, well-rated US and European corporate bonds and European high yield are underweighted in the short and medium term. European convertibles are also short term. Finally, neutrality is advised on US government bonds and emerging debt, both short-term and medium-term.
Investing opinion
We also remain neutral on equities. Even if we are at buying prices in a long-term perspective, the uncertainties are too high to increase right now. Indeed, an embargo on Russian oil and gas would have very serious economic consequences for European economies, which would plunge into recession. Geographically, Chinese equities have our preference.