Inflation disturbs even professional investors. They have been accustomed in recent years to historically low rates, which have sent equity markets to a high, thanks to the abundance of credit.
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On the contrary, bonds, ie debt securities issued by companies or States, posted very low returns, even if they remain very safe assets.
But the situation is changing. Central banks gradually reduce the amount of credit to temper inflation. The US Federal Reserve (Fed) has even started raising its interest rates. Bad news for the stock markets: more expensive credit weighs on companies’ borrowing capacity and on consumption.
Some experts believe that this could lead to a drop in their profits, and therefore their dividends, at the end of a year 2021 which will have enabled CAC 40 companies, for example, to post record profits and dividends. The French index rose by nearly 30% over the year.
“This inflation is very cyclical: let’s not panic! », explains Alexandre Hezez, strategist at Banque Richelieu. For the time being, the results of the large companies in the first quarter, which are in the process of being published, remain in good order.
“The most important thing is for the Chinese economy to recover, because it is the cause of many bottlenecks, explains Alexandre Hezez. A mechanical effect will participate in the decline: commodities will remain at a high level, which is already factored in by the inflation figures. »
However, it is impossible to ignore the outlook, particularly on the risks posed by the Ukrainian conflict to growth. “We are underweighting our European equities », explains Alexis Naacke, at Yomoni, a management company.
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Positions on so-called “cyclical” stocks, that is to say stocks strongly correlated to growth, such as the agrifood giants, should be reduced. “We are turning to sectors and companies that have real power to impose their prices”, he continues. Understand: luxury or technology companies like Apple.
“Forced to live with inflation”
Unless we simply have to turn away from the stock market. Because alongside these riskier products, professional investors could be tempted to strengthen their bond portfolio, with the prospect of higher returns. Ten-year US Treasury bills are flirting with rates at 3%, a first since the end of 2018.
The risk premium, ie the difference in profitability between these two investments, changes. Will investors therefore rush into bonds? Experts are not convinced. “Central banks will be forced to live with inflation so as not to destroy growth and employment” and should therefore limit the rise in their rates, affirms for example the American BlackRock, the first asset manager in the world, in a note published on April 18.