Mauro Ratto, Co-Chief Investment Officer Plenisfer Investments SGR
Interest rates and inflation no longer drive market sentiment: today, financial flows are increasingly influenced by the impact of policy decisions in Washington and by the ‘whatever it takes’ scenario that has emerged in Europe where the debate on the need for strategic autonomy in defence, together with the urgent need to achieve energy independence, is ongoing.
In this evolving scenario, we confirm our macroeconomic thesis: the demise of globalisation is leading to an environment of higher production costs, high interest rates and significant debt burdens.
We are approaching the end of a prolonged positive macroeconomic cycle, sustained not by organic growth, but by debt-fuelled fiscal policies, which do not bode well for the future. A high level of debt, especially in developed economies and China, is typically associated with low GDP growth in the long term and, consequently, low equity returns in the medium to long term.
Nevertheless, through a flexible, benchmark-neutral approach, investment opportunities can still be found in global markets.
Looking at the US market, we believe that single opportunities remain. However, the technology sector is characterised by excessive valuations and concentration risk, while maintaining solid fundamentals. The uncertainty arising from the Trump administration's trade policies has particularly penalised US markets in the fist half of March, generating a risk-off effect on global markets.
In Europe, we continue to look closely at energy transition and infrastructure investments, also supported by announcements of fiscal expansion in the region. The possibility of a peace agreement between Ukraine and Russia also introduces multiple scenarios regarding Russia's energy supply capabilities, which could put downward pressure on energy prices. The banking sector continues to offer opportunities, particularly in Greece where the economy is showing encouraging signs.
International investors remain cautious on China, where valuations are at record lows. In the technology sector, fundamentals remain solid, and the steady generation of free cash flow and earnings growth over the years show significant compression in multiples. Selected investment opportunities can therefore be found here.
On the bond side, the steepening of the yield curve reflects the immediate reaction of bond vigilantes to the coming rise in Europe's debt-to-GDP ratio. Against this backdrop, we believe it is preferable to maintain a relatively short duration.
Finally, gold continues to fulfil its function of stabilising and protecting the portfolio as it continues on its upward trajectory.
Disclaimer
This analysis relates to Plenisfer Investments SGR S.p.A. ("Plenisfer Investments") and is not a marketing communication regarding a Fund, investment product or investment services in your country. This document does not constitute an offer or invitation to sell or buy any securities or any asset or venture described herein and does not form the basis of any contract.
Any opinions or forecasts provided are current as of the date specified, may change without notice, do not predict future results, and do not constitute a recommendation or offer of any investment product or service. Past performance does not predict future returns. There can be no guarantee that an investment objective will be met or that there will be a return on capital. This analysis is intended only for professional investors in Italy under the Markets in Financial Instruments Directive 2014/65/EU (MiFID). It is not intended for retail investors or US Persons, as defined in Regulation S of the United States Securities Act of 1933, as amended.
Information is provided by Plenisfer Investments, authorized as a UCITS management company in Italy, regulated by the Bank of Italy - Via Niccolò Machiavelli 4, Trieste, 34132, Italy - CM: 15404 - LEI: 984500E9CB9BBCE3E272.All data used in this analysis, except where otherwise indicated, are provided by Plenisfer Investments. This material and its contents may not be reproduced or distributed, in whole or in part, without the express written consent of Plenisfer Investments.
