2024-01-22 14:42:27
Despite the risks of recession which weighed on sentiment throughout the year, the stock markets are ending 2023 on a largely positive note. This good performance, however, masks very marked divergences.
A strong concentration of performance on a small number of stocks
Thus in the United States, the increase in the S&P 500 of 24.29%** was driven by a handful of stocks, the famous “Magnificent Seven***” which alone explain nearly two-thirds of the performance since the beginning of the year. In Europe, even if the phenomenon is less marked, Novo Nordisk, SAP and ASML together explain more than a quarter of the progression of the Stoxx Europe large 200 index this year. Thus, despite a strong concentration of performance on a small number of stocks, the Growth and Value management styles display fairly similar performances in Europe with increases close to 15%**** for the MSCI Europe Value and Growth indices. This year confirms the paradigm shift that took place with the end of an era characterized by low investments, zero inflation and negative interest rates which weighed heavily on the performance of the Value management style during the years past
Banks were a major contributor to performance
In our portfolios, banks were a significant contributor to performance in 2023, notably with the outperformance of Unicredit, Banco Santander and Intesa Sanpaolo. Despite the turbulence in March caused by the collapse of several regional banks in the United States and the hasty rescue of Credit Suisse by UBS, the sector benefited from the rise in interest rates which allowed a significant increase in the interest margin and results.
This phenomenon particularly benefited retail banks in southern Europe, whose credit portfolios, mainly at variable rates, mechanically benefited from the rise in interest rates. At the same time, these banks continued to display a cost of risk close to zero, which allowed them to publish exceptionally high results this year, but undoubtedly not sustainable, which led us to sell our position on Unicredit, the largest contributor. performance of our portfolios this year. For other retail banks lending more at fixed rates, the diffusion of the rate increase in their income statement is much more gradual but should allow continued profit growth over the coming years.
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