“The normalisation of rates is typically good for equities, though much of this is already priced in.”
On political risk…
“With regard to Italy, we are not in a recession and we do not expect there to be one in 2019. Political risk, or at least the negative perception of political risk by the market, looks to have reached its peak and should begin to level off – even the BTP/Bund spread has fallen from its peak.”
“It was difficult year in 2018. Cyclicals suffered a significant sell-off and mid-caps were down between 30% and 50%, both areas where we had significant exposure. Given the current environment and the speed and severity of market moves, we have reduced our equity exposure and are using more derivatives, in the form of futures, which allows us to be more agile.”
“The drawdowns that we have seen more recently represent interesting buying opportunities. At the beginning of last year we were struggling to identify new investment ideas with markets trading at such high valuations. Today, the market seems to have over-corrected with liquidity-sensitive assets having suffered heavily. A lessening of political risk is a necessary catalyst to unlock value.”
We’ve been in a very long cycle, starting in 2008 for many countries, and we are coming towards a recession in the US in 2020. So, as an asset manager, we are having to accommodate a declining growth environment where the market is going to be more volatile.”
Sophie Chauvellier holds a master's degree in International Trade and a degree in Chinese. She started her career in 1997 in Hong Kong as buy-side Analyst in a South African bank, INVESTEC. In 2000, she joined Oddo Securities as sell-side equity Analyst and was then appointed fund of funds Portfolio manager in 2005, before joining Dorval Finance in October 2008.