Monthly House Views - Moving to a new year - December 2024

From an election year to a year of economic policy choices 
In 2024, half the world's population will have gone to the polls. In 2025, the new political forces in power will introduce economic policies that could have a decisive impact on the economy. In the United States in particular, the new Trump administration is likely to confirm a policy of supporting the country's economy by cutting taxes and regulations and strengthening its industrial policy. At the same time, more restrictive trade and migration policies could once again generate tensions, particularly on inflation. In Europe, political uncertainty remains the order of the day, particularly in Germany and France. However, the economy could continue to hold up well, supported by confirmation of the fall in inflation and interest rates. In particular, the ECB's monetary policy could adopt a much more accommodating tone. In China, measures to stimulate activity and support the property sector have been announced in 2024 and could be stepped up, especially in view of the potential tightening of US trade policy. 

Investment strategy: maintaining our clear direction as we approach 2025 
We continue to favour the US equity market, focusing on sectors and styles that would particularly benefit from favourable industrial policy and that would withstand the higher interest rate environment, in particular the value style and small and mid-caps. We also remain overweight to the European markets, which would benefit from a stronger US economy, favouring companies and sectors that are both exposed to US activity but with limited risks in terms of trade restrictions. On the other hand, we remain underweight emerging equity markets, as China appears to be the first country to be targeted by trade restrictions. Despite our marked strategic orientations, we are maintaining a highly diversified allocation. Uncertainties remain high, particularly those relating to the implementation of economic policy choices. In addition, the geopolitical context could become even more complex. We are therefore maintaining our highly diversified global positioning. We are maintaining a slight overweight position to the European bond market, particularly in less risky companies, and a neutral stance on gold. 

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