Jurgen Vluijmans

With Europe and the US entering recession in the last half of this year, Asia, despite a series of severe lockdowns, is facing a brighter future, according to MainFirst portfolio manager Frank Schwarz, in an Investment Officer BE  interview, who adds that his favourite Asian investment theme is semiconductors.

Schwarz manages the newly launched MainFirst - Megatrends Asia fund. This equity fund focuses on Asian investment themes such as digitalisation, consumption, automation and decarbonisation.

Problems with energy supplies, a perfect storm of geopolitical uncertainty and, in the autumn, probably another Covid flare-up… Investors in European equities are not having it easy, and yet not everything is doom and gloom.

At first glance, there is little reason to be optimistic about Europe and European equities by extension. The enormously weak euro bears witness to the malaise on the Old Continent. Optimists will argue that exporters will benefit, but then the energy supply must be secured, and it is not.

Germany and France are Oddo BHF Asset Management’s core markets, but the asset manager now wants to expand further into Belgium and Luxembourg. In Belgium, this is done mainly through wholesale and through contacts with brokers. And private equity is democratising.

The Nasdaq is in a clear downtrend. It is still being held up by the ‘generals’, the big tech heavyweights such as Alphabet, Microsoft and the like, but it is important to watch out.

The performance gap between value and growth is still significant since the beginning of the year, but growth is starting to catch up. With the Fed on a rate hike course, and with the possibility of a shallow recession in Europe and the US, growth stocks may paradoxically start to outperform again.

Gold is playing its traditional role in the flight to safety and rose above 2000 dollars per troy ounce this week. There was disappointment last year when the gold price reacted poorly to sharply rising inflation, but Ukraine has pushed up the price. Gold thrives best at times of  chaos, but it is not a good hedge against inflation.

A global macro strategy seems the place to be in the current extremely volatile stock market climate. But beware, if you do not combine global macro with micro factors, you are doomed to fail, says Christopher Govaerts (photo), chief strategist at Belgian private bank Nagelmackers. Specifically, British equities and emerging markets such as China and Brazil now offer a counterweight.

Conventional stock market wisdom says investors should buy when the cannons roar and sell when the stock market hears the clarion call. The cannons are literally roaring today. But does this reasoning hold true?

Author Ben Carlson has written extensively on the relationship between war and stock market performance. However, the relationship between geopolitical crises and market performance is not as obvious as you might think, he argues.

Long duration trades are fading into the background because of tighter monetary policy. Markets have adjusted swiftly and find themselves in the middle of the cycle. The volatility that accompanies this is not necessarily disastrous, said Steven Vandepitte (pictured), asset allocation strategist at ING Private Banking. 

Vandepitte believes that the US faces three to four interest rate hikes at most. 

The effects of the inflation wave crashing over the Eurozone and especially in the US are not temporary. As high energy prices persist and second-round effects  still have to find their way into the economy, analysts question the ECB’s reluctance to act and raise eurozone interest rates. “Can the ECB claim that all is well and good and stick to its latest statements and position? The markets do not seem to believe that.”