In October, eurozone stock markets continued the downward trend which began in July. Numerous factors have encouraged investors to lower their exposure to risky assets, such as US 10-year treasuries yielding around 5%, worsening geopolitical instability and a subdued earnings season including certain significant and long-lasting events (e.g. Sanofi and Worldline). Despite the outperformance of sectors benefitting from the crisis in the Middle East (e.g. defence and oil), growth stocks did better over the month compared with value stocks. Investors are paying attention to how current interest rates affect financial leverage and refinancing terms.

The Amplegest Pricing Power fund declined –2.92% in October, compared with –3.23% for the benchmark index. Consumer discretionary spending slowed. Across the luxury sector there was a decline in European and online demand, which had a negative impact on LVMH and MONCLER. KERING was no exception, and we closed our position before quarterly earnings were announced. The fund’s exposure to the luxury sector now stands at 13%. Premium automobile companies experienced similar effects. Earnings announced by MERCEDES BENZ revealed weaker demand for high-end electric cars. Positive factors included our selection of health care companies (ICON, BIOMÉRIEUX, ESSILOR LUXOTTICA) which outperformed the sector. There were also optimistic messages from software (DASSAULT SYSTÈMES, ATOSS) and aeronautics (SAFRAN).

In October we sold our position in KERING, trimmed our positions in LVMH and CAPGEMINI, but added to UCB, ICON and SAFRAN.

Given the macroeconomic conditions described above, the profitability of our companies with strong pricing power continued to show strength and resilience during Q3 earnings announcements.