“ASML is the most strategic asset in the European tech sector”
‘Thales is key to the continent’s security, and Schneider Electric is central to electrification’
Key points
Strategic sectors, monetary policy and market risks. These are the topics covered by Quentin Duquesne, European equity fund manager and analyst at Candriam.
The EU has just presented the Chips Act 2.0 to build strategic autonomy in the field of chips and semiconductors as well. What impact will this have on European companies operating in the sector?
The EU’s Chips Act 2.0 shifts the focus from supply-side subsidies towards demand creation, industrial adoption and supply chain resilience. For European semiconductor companies, the main benefits are faster authorisation procedures, easier access to EU funding and stronger links with end markets such as the automotive, industrial automation and energy sectors. The main beneficiaries are power electronics, sensors, photonics, microcontrollers and industrial or automotive chips.
The ECB has just raised interest rates, whilst the Fed has left them unchanged. What are your expectations for European monetary policy between now and the end of the year?
Given the recent rise in inflation driven by energy prices, our main scenario remains that of a further rate rise later this year. However, whilst rising energy prices may push up inflation in the short term, there are so far few signs of persistent second-round effects. We therefore expect the ECB’s response to remain cautious and limited, rather than marking the start of a new cycle of monetary tightening.
And what are your expectations for inflation?
We believe that the recent rise in energy prices is a temporary shock rather than the start of a new inflationary cycle. The macroeconomic environment differs significantly from that of 2022. Labour market conditions are much less conducive to the emergence of a wage-price spiral, demand is less buoyant than in the post-pandemic period, and fiscal support has been more moderate and targeted. Furthermore, core inflation trends had been evolving broadly in line with the ECB’s target prior to the latest energy price shock.
What specific drivers do you see for strategic sectors such as energy, industry, healthcare, defence and technology in Europe?
Although each sector faces specific challenges, they are linked by a single driving force: the EU’s objective of strengthening competitiveness and autonomy. In the energy sector, the European strategy is driven by the need for security, electrification and decarbonisation, with the aim of reducing external dependencies and adapting infrastructure to meet evolving demand from industry, data centres and renewables. At an industrial level, the main drivers are competitiveness, local sourcing, supply chain resilience and the promotion of European champions. In the healthcare sector, the pandemic has highlighted the vulnerability of supply chains, particularly with regard to pharmaceutical products and medical equipment. Consequently, security of supply, the resilience of domestic production and pharmaceutical innovation have gained greater prominence on the political agenda. Defence has entered an industrial phase. Budgets are being recalibrated, threats persist, supply cycles are accelerating, and governments are increasingly favouring European suppliers. In the technology sector, Europe is reducing its dependence on semiconductors, AI, cloud computing and cyber security. The aim is not only technological leadership, but also control over critical infrastructure.
