Crédit Mutuel Asset Management: Equity Market Convictions
By Caroline Lamy, Head of Equity Management at Crédit Mutuel Asset Management
The outlook for European equity markets in 2025 presents a mix of opportunities and challenges. Early in the year, European stocks may experience a period of catching up. While earnings growth expectations are likely to be revised downward, there are still emerging opportunities. Notably, companies with strong shareholder returns and solid competitive advantages stand out. This includes long-established players in sectors such as healthcare, diagnostics, technology, and innovative manufacturing.
On the international equities side, markets are evolving rapidly, and this asset class remains a crucial diversification tool to capture global growth, particularly in terms of innovation and expansion. The U.S. economic environment supports consumer spending, which is expected to drive a portion of the global economy, although the potential protectionist measures under the new Trump administration could temper this trend.
For emerging markets, their dependence on the U.S. economy and the import duty policy will be key in shaping the start of 2025. In this context, emerging market stocks remain under observation, with selectivity being a dominant approach in portfolio management.
Regarding small and mid-cap stocks, while a recovery in this asset class is still awaited, diversification towards these stocks in 2025 could present an opportunity. Moreover, this market segment is sensitive to interest rates, with stocks historically outperforming on average 6 to 12 months after the start of a rate cut. We have a strong medium-term conviction, supported by valuations, expected earnings growth, and a likely rebound in the PMI.
In terms of thematic investments, innovation will remain a central theme, and by innovation, we go beyond just technology stocks: healthcare, of course, but also energy efficiency, electrification, automation, and AI. Long-term trends such as a sustainable economy, improvements in the quality of life and well-being remain key convictions, that enable us to identify sources of sustainable growth, beyond passing fads.
Stocks follow a long-term trajectory, and excesses are often opportunities to strengthen positions for long-term performance. Our stock-picking DNA leads us to analyze companies through a 360° approach, taking into account all stakeholders, including non-financial factors.