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31/05/2024

May was positive overall for the global stock markets, with several marketplaces showing gains. In Europe, the Euro Stoxx 50 gained +2.6%* (+10.2% YTD*), while in the United States, the S&P 500 posted a solid performance of +4.8%* (+10.6% YTD*). Hong Kong continued its upward momentum with a rise of +1.8%* (+6.1% YTD*), marking its fourth consecutive month of gains. Annual inflation in the US fell to 3.4% from 3.5% in April, thanks to stable food prices and a slight decline in housing costs. In the Eurozone, inflation accelerated to 2.6%* from 2.4%* in April, mainly due to higher services costs. However, the ECB is expected to announce its first interest rate cut in eight years in early June. In the US, the situation remains far from the Fed’s 2% target, and the consensus is predicting, without much certainty, a first cut in key rates in September. However, due to the continued resilience of the US economy, some support is emerging for the scenario of no cuts in 2024. In China, the government announced new measures to support its real estate sector. This is the first national property purchase programme since the start of the crisis in 2021. Confidence could return if the government is perceived as the buyer of last resort, similar to the US Troubled Asset Relief Program. The plan notably includes reducing the minimum contribution required to 15% for a first property purchase. Local authorities can also ask public companies to buy unsold apartments to convert them into social housing. The Chinese central bank has put in place a €39 billion lending facility, enabling potential bank financing of €67 billion for these purchases. The housing crisis continues to weigh on the Chinese economy in an environment where 96% of households own at least one home, and a third own at least two.
R-co Valor gained 1.9% in May (C share), bringing its year-to-date performance to +9.1%. The fund benefited from its exposure to industrial stocks and more specifically from the rebound of Alstom and Bombardier. The first was driven by the progress in its deleveraging plan; the second was by its investor day at the beginning of the month, followed by a buy recommendation by Bank of America. Conversely, energy stood out as the worst contributor, affected by concerns about global demand. In May, the equity portion of the fund remained relatively stable at 68.3%. However, transactions were made. In terms of purchases, US railroad company Union Pacific was increased on weakness. Indeed, since the beginning of the year, the rail sector has been confronted with a sluggish freight environment and moderate volume growth. At the same time, we continued to build our holding in Grab, a Singaporean company operating in the Asia-Pacific region specialising in transport of persons and food delivery. Lastly, among sales, we continued to make gains by reducing our position in online travel agency Trip.com after a +43% year-to-date performance.