'Asml can rely on state-of-the-art technology'
"Alphabet and Visa are two other companies with competitive advantages and solid infrastructures."
Key points
Laure Négiar, analyst and manager of Comgest's global equity team, explains how the careful selection of companies with established businesses is important, especially in market phases characterised by volatility
After the start of the Middle East peace process, what remains of the geopolitical tensions and their influence on global stock markets?
However, geopolitical tensions, in particular the conflicts in the Middle East and Ukraine, have increased market volatility in recent years, favouring value sectors such as energy and defence. We address this uncertainty by sticking to our quality growth investment approach. The future is difficult to predict. That is why our stock selection approach focuses on identifying companies with durable competitive advantages, strong earnings growth, solid ESG credentials and experienced management teams.
Which sectors are most indicative of market trends?
Our strategy takes a more selective approach to artificial intelligence-related stocks: we tend to favour suppliers such as Tsmc, the world's largest chipmaker, rather than betting on basic artificial intelligence models, where the long-term winners remain uncertain. The healthcare sector is another structural growth engine. Despite pricing pressures, we believe there are still opportunities for quality growth in this sector. For example, the Swiss company Lonza, a world leader in chemical and biotechnology production, is supported by production sites around the world and a growth model based on drug volumes, not prices. The company's Swiss identity and production facilities in the US have enabled it to circumvent the Trump administration's increasing scrutiny of the pharmaceutical sector.
The recent political changes in the US have shaken Europe, China and other countries out of their torpor. Where are the best opportunities for returns outside the US?
There are innovative companies outside the US, in places like Europe, Japan, and emerging markets, that benefit from a number of structural factors, such as critical data, healthcare, energy transition, and consumer spending. For example, Keyence, a Japanese manufacturer of industrial automation equipment, as the global workforce ages, provides companies with sensors, lasers, and measurement systems that are essential for factory process automation.
US exceptionalism has receded and China is demonstrating similar capabilities in high-growth sectors. What role will technology continue to play in portfolios?
We continue to see exceptional American companies in high-growth sectors, but innovation and technology are far from being exclusive to the U.S. High-quality data, for example, is emerging as a key factor in the advancement of artificial intelligence. German company Sap, the world's largest provider of enterprise resource planning software, is well positioned to benefit from the rise of artificial intelligence, thanks to customer data accumulated over decades.
