Rises at the long end of the yield curve reflects investor awareness that inflation is here to stay, the consequence of several factors: the energy transition, with energy prices now structurally higher; global warming, with temperature volatility harmful to farming; and demographic trends, with a rise in retirees who consume but do not produce. Given these elements, it is unlikely that inflation will fall below 2%.

Markets have once again deferred rate cuts. This helps the financial sector but hurts the most indebted companies, such as SHURGARD and ALD, whose economic model requires high levels of debt financing.

ALD (automobile leasing) disappointed at its 2023 Capital Markets Day. The company announced a weaker outlook post-merger with LeasePlan, whereas investors expected improvement. After meeting with ALD management we decided to sell our position.

SHURGARD (self-storage rental units) has the lowest debt level in the property sector. It continues to grow and benefits from inflation through higher rents.

NEXI (digital payment) has been hit by investor disillusion with the digital payment sector after Adyen’s profit warning. The leader in Italy, NEXI has a very attractive outlook thanks to the transition to bank cards in a market where one in four transactions is still paid in cash.

ZALANDO (online fashion) and MONCLER (luxury fashion) have been hurt by consumer sentiment in Europe and China, respectively.

The sharp rise in oil prices has helped the energy sector. We profit through investments in TECHNIP ENERGIES (ecological transition engineering) and GTT (LNG transport carriers). Scout24 (online real estate listings) continues to provide visibility to German real estate agents in a market which has turned completely against them.

We have sold our position in AMADEUS after a nice run; in return, we have opened positions in ACCOR and DO & CO. The hotel chain, leader in Europe and Asia (excl. China), has completely changed over the past decade. It should begin to enjoy the results of its asset-light metamorphosis and its move towards premium products.

DO & CO, “the best restaurants at 39,000 feet”, provides premium airline catering services at lower costs (€7–8 per meal, or <2% of fare).

Finally, we have opened a position in AALBERTS (industry, hydronic flow control), which works to improve the energy efficiency of buildings.