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Benjamin Melman, our Global CIO AM, shares his insights for the upcoming months, focusing on major asset classes, essential themes, and priority regions as we enter the new year.

Just three years after the launch of the EdR SICAV Corporate Hybrid Bonds fund, Edmond de Rothschild Asset Management has positioned itself as a pioneer in the non-financial hybrid debt market, known as "corporate hybrid", becoming a key player in this segment in Europe with over 700 million euros in assets under management.
 
We invite you to explore our team's insights on this asset class, as well as our strategic outlook for 2025.

Too many uncertainties are currently weighing on markets, amid unfavourable valuations, for us to expose our portfolios unduly to major market risks. In this regard, we have maintained our neutral view on the two main asset classes - bonds and equities - as well as our modest overexposure to Chinese equities. We kept up our equity exposure on account of the fading risk of a recession in the US, now all but removed, and of the stronger-than-expected resilience of the global economy.

•    The arrival of DeepSeek, an AI aiming to be more efficient and cost-effective than ChatGPT, created a buzz among investors.
•    The reductions in public spending and the size of the federal administration planned by Donald Trump could have negative repercussions on economic activity and the labor market.
•    The ECB has lowered its key interest rates due to the slowdown in inflation and weak growth.

DeepSeek is the new keyword you need to know today if you invest or stand in the forefront of technology!

•    Donald Trump reassured financial markets by delaying potentially inflationary measures, leading to a rise in equity markets.
•    Exchanges between Donald Trump and Xi Jinping helped mitigate the risks of a trade war, thus supporting a rebound in Chinese stocks.
•    Markets were bolstered by positive developments such as the ceasefire in Gaza, improved manufacturing PMI in Europe, and excellent fourth quarter figures in the US. 

•    Underlying inflation in the US has slowed more than expected.
•    In the United States, investors are now anticipating a rate cut in June rather than October.
•    The fall back in Treasury yields revived equity markets, with European indices doing particularly well.

While January is the month of wishes and good resolutions, what can we expect in terms of regulation for sustainable finance in Europe by 2025? In France, candidates for the competitive examination and students at the Institut national du service public (INSP), which has replaced the Ecole nationale d'administration (ENA) since 2022, have been working for decades on a similar question: more or less state? The right answer is a more EFFICIENT state. 

•    The president-elect’s very aggressive stance on foreign policy gave investors more cause to worry and US equities fell further and bond yields increased. 
•    The US labor market continues to show signs of strength, with rising job vacancies and falling unemployment registrations.
•    The UK saw the biggest surge in bond rates over the week. 10-year gilts hit an intraday high of 4.9%, a level not seen since 2008.

•    The latest developments in Europe have failed to improve political visibility.
•    In the US, the economy is still proving resilient.
•    We are sticking with our tactically positive stance on equities with the accent on the US and China. Our strategic view on investment grade credit is unchanged.

As expected, the ECB cut its deposit rate by 25 basis points.

In China, the lack of concrete details from Beijing regarding economic support measures disappointed investors, which weighed on the stock markets. 

In the United States, the release of inflation statistics held no surprises, with the CPI index aligning with expectations.

Edmond de Rothschild AM appoints Vianney Hocquet as Hybrid Corporate Debt Portfolio Manager, effective December 11th, 2024.