Global markets continue to navigate through turbulence and change, with political and economic dynamics influencing investment strategies. According to Zak Smerczak, Analyst & Portfolio Manager at Comgest Growth Global, change remains the only constant in this evolving landscape.
The impact of Trump’s re-election on markets
In November, investor attention focused on Donald Trump’s re-election as President of the United States and the Republican Party’s majority in Congress. This scenario fueled a strong rally in U.S. equities, driven by optimism about Trump’s economic agenda, including tariffs, deregulation, and tax cuts. The most benefited sectors were finance, industrials, and energy.
While the U.S. economy could manage a soft landing, growing moderation in artificial intelligence overvaluation is something to monitor. In Europe, economic conditions remain mixed, while Japan may continue to benefit from a weaker yen, particularly due to tourism. However, questions persist regarding the sustainability of this advantage. Meanwhile, fiscal stimulus in China raises concerns about its actual impact on the real economy.
Key sectors and growth prospects
Some companies posted strong third-quarter results, including Visa, S&P Global, and Microsoft, benefiting from an improving economic environment. In the luxury sector, despite recent market pressures, Comgest remains confident in its secular growth potential. EssilorLuxottica, L’Oréal, and LVMH have proven to be successful compounders, delivering consistent performance over time. For example, investors who bought LVMH at the peak of every market cycle in the past 30 years would still have achieved positive returns.
Ultra-luxury brands, such as Hermès and Ferrari, have demonstrated resilience, thanks to their brand strength and exclusivity. These factors have helped maintain stable value, despite economic fluctuations.
Investment strategies and future outlook
Although U.S. markets have welcomed Trump’s re-election, uncertainty remains regarding his administration, which could lead to volatility in some sectors. However, for investors, such volatility can present opportunities to find high-quality companies at attractive valuations.
Comgest continues to follow a quality growth approach, focusing on disciplined investment selection. This strategy allows for above-market growth rates with greater visibility and resilience, crucial factors during periods of economic uncertainty.
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