For stocks too, the sun rises in the east. According to Alain Krief, head of bond management at Edmond de Rothschild AM, as well as his colleague Michaël Nizard, director of the multi-asset and overlay department, the observation is clear. From a geographical point of view, the nuggets come from Asia, mainly from China and India “. Japanese equities, traditionally performing although disappointing over the past year, gave way to their Chinese and Indian counterparts.
The Middle Kingdom is indeed going against the grain of the other major economic powers: while the Fed is aiming for a normalization of its balance sheet and stopping the injection of liquidity, the People’s Bank of China is supporting its economy, helped by a context inflation moderation. Proper management of crises, whether real estate (with the absence of contagion to other markets) or health (with the implementation of measures to reduce the uncertainty caused by the Covid-19 epidemic), ensures also in the country a more favorable market context. The two experts evoke yield prospects of around 15% over the year in China, while specifying that ” PERs remain low “. India, although lagging behind its neighbour, has surprised by its economic dynamism and its industrial boom.
Allocation by theme
From a sectoral point of view, the two managers mention the need to use a thematic approach rather than a purely sectoral one. They made a point of recalling the situation of companies in the energy and financial stocks, which ” knew how to pull out of the game », and that of technology and luxury which, on the contrary, have suffered a lot since the beginning of the year.
The thematic approach proposed by Edmond de Rothschild AM allows for a certain flexibility and targets yield, regardless of the stock and the sector targeted. Three major themes stand out: Big Data, human capital and the energy transition. On Big Data, it is not a question of targeting technological stocks, but of being interested in companies using mass data processing which also present reasonable valuations within the IT universe. For example, Michaël Nizard cites Orange, ” little emblematic of this universe but which has climbed nearly 16% since December 31.
Stride, a company in the education sector, is a good example for the human capital theme. A leader in distance learning courses in the United States, the company’s activity has solid barriers to entry. Moreover, since the pandemic, “ we are witnessing a sharp acceleration in growth, fueled by the rise of telework “, specify the managers, before adding: ” The title is little known and is paid 14 times its 2022 earnings per share for a growth rate close to 10% over the years to come. “.
Protect its management
Finally, regarding the theme of energy transition, the two professionals cite Waga Energy. A French company recently floated on the stock market, Waga Energy offers a solution that transforms landfill gas into biomethane in order to inject it into the gas network or produce electricity. The only player dedicated exclusively to the recovery of landfill gas, the group “ benefits from state support for biomethane and offers a lower cost than biogas by methanizer and most renewable energies “.
Last point raised by the two experts: protected management. The idea here is to foresee the unpredictable “. They take the current crisis in Ukraine as an example. In order to mitigate risks qualified as extreme, the managers emphasize that it is a good idea to protect yourself with options that allow you to invest in securities without bearing all of the risks.
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