The overweight remains appropriate for the medium term.
Cholet Dupont slightly underweight in equities | Photo credits: iStock
Vincent Guenzi, strategist at Cholet Dupont, explains the recent decline in financial markets by the establishment of strict confinements in China and fears about the consequences of the tightening of monetary policy in the United States. ” The continued rise in interest rates caused a further sharp drop in the bond and credit markets and a generalized appreciation of the dollar. Global inflation is not yet showing the signs of stabilization that could calm the continued rise in interest rate expectations and the risks of recession that could result from this in the United States. The likelihood of this remains low for now, but China and Europe are not immune to a temporary slowdown. The context therefore remains uncertain in the short term and the equity markets have already partially taken all these risks into account.. »
This is why this expert does not anticipate a further sharp fall in the financial markets. The economic and monetary environment would not justify it, as valuations have already fallen and risk premiums remain correct. ” However, the most expensive stocks remain very sensitive to rising interest rates. Thus, sawtooth evolutions of the indices seem quite likely for the next few months with high volatility. Consequently, it seems premature to us to raise the investment levels of the portfolioss.”
Vincent Guenzi even slightly lowered his exposure to equities to 46.7%, which shows a slight underexposure, in particular to European equities. But it remains overweight in the medium term on the latter as well as on Wall Street. In terms of bonds, all asset classes are underweight in the short and medium term, with the exception of US government bonds, where neutrality is required over both periods, and emerging debt in the medium term. .
Investing opinion
For our part, we are also neutral on equities. However, we would recommend reinforcements with a Cac 40 below the 6,000 point mark, the low point reached at the start of the outbreak of the war in Ukraine. Indeed, barring an improbable recession, corporate results should be satisfactory this year and the peak of inflation should soon be reached. Finally, the war in Ukraine is not spreading to other countries and Vladimir Putin’s speech yesterday was less brutal than expected.