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30/04/2024

Western stock markets recorded their first monthly correction of the year in April. The MSCI All Country was down -3.4%*, led by Europe and the US (-3.2%* for the Euro Stoxx 50 and -4.2%* for the S&P 500). In China, the Hong Kong benchmark rose +7.4%*, bringing its gains since 22 January (low point) to +18.7%*. Inflation figures, which were more resilient than expected in the United States, dampened investors’ hopes of the likelihood of a rapid and sharp cut in key rates by the Fed. The acceleration in the CPI in March, to +3.5% year-on-year, fuelled by petrol, housing and transport prices, brought “higher for longer” to the fore, catapulting expectations of an upcoming rate cut in December. A certain economic disparity between Europe and the United States seems to be confirmed, with weakness in the Old Continent. Growth expectations for 2024 are +2.7% for the United States and +0.8% for the Eurozone. In the same vein, where inflation seems to converge towards 2% for the latter, it is still above 3% in the country of Uncle Sam. This situation could, in the long term, create significant distortions between the monetary policies of the two regions, with the announcement of the easing of the ECB’s monetary policy expected at the meeting on 6 June. In China, the accumulation of good news seems to be eroding the prevailing pessimism. The first quarter’s reported growth beat expectations at 5.3%, with the Caixin manufacturing PMI reaching 51.4 in April, as well as the stabilisation of property prices in Hong Kong, which fuelled the rebound seen this month.
R-co Valor corrected by -0.4% in April (C share), bringing its year-to-date performance to +7.1%. The fund cushioned the market decline quite well over the month, supported by its exposure to mining stocks (both gold and diversified) representing 14% of the equity bucket. Our exposure to China also provided strong support, standing out as the main country contributor over the month. Conversely, technology stood out as the worst contributor after several consecutive months leading the way, with the sector lagging on its US component. In April, the equity portion of the fund remained relatively stable at 68.5%. However, we went ahead with several transactions, still with the aim of reducing the most cyclical part of the portfolio in favour of companies with a more defensive profile. As a result, we completely sold our position in mining group Teck Resources and took profits in Ivanhoe Mines. We also reduced in China, where certain sectors have performed particularly well since the beginning of the year. Online travel agency Trip.com was thus trimmed after posting a performance of +34% since January. At the same time, we added to stocks still neglected by the markets, which are rather defensive, such as BioMarin Pharmaceutical, Medtronic and AstraZeneca in the healthcare sector. Finally, a new stock was added to the portfolio: Grab, a Singapore-based company operating in Southeast Asia that specializes in transporting people and meals.