'Brown-Forman is a defensive, quality company'
"The other companies I watch carefully are Terna, Novo Nordisk and Alphabet."
Key points
Here are the evaluations of Davide Pasquali, vice-president and director of Pharus Asset Management Sa and Pharus Management Lux Sa and president of Pharus Sicav and Multi Stars Sicav, on the uncertainties that are currently shaping financial market trends globally.
How will pressures on energy prices reshuffle the variables that shape markets, first and foremost interest rates and inflation?
Tensions on energy prices are bringing a supply shock back to the fore, complicating the work of central banks. Inflation, which seemed to be on its way to target, is rising again and, above all, risks being transferred to the more persistent core component. This radically changes the scenario: the expected rate cuts turn into a prolonged pause or, in case of further escalation, into new rises. The problem is that all this takes place in a context of already weak growth, with a real risk of a stagflationary dynamic, i.e. high inflation and slowing GDP.
Are there any geographical areas that can be considered more sheltered from the escalation of geopolitical tensions in the Middle East?
Some areas are relatively more resilient for structural reasons. North America benefits from substantial energy autonomy, which mitigates the impact of the shock. In parallel, several emerging economies, particularly in Latin America, benefit from rising commodity prices, offsetting energy costs. Some South-East Asian economies are also benefiting from the global production diversification process. Europe remains among the most exposed areas in terms of energy dependence and industrial vulnerability.
How are you coping in terms of investment strategy with such a complex phase as the current one?
At this stage we favour quality and resilience. We focus on companies with high pricing power, able to pass on costs without squeezing margins. On the bond front, we are keeping duration low to limit the impact of high rates. We also reinforce our geographical diversification, with a dollar component serving as a hedge in times of stress. We complement the portfolio with a portion of real assets, such as gold, commodities and infrastructure, which historically protect against inflationary erosion.
Which drivers do you follow most closely?
There are mainly three. The first is core inflation, the true indicator of inflation persistence. The second is monetary policy, with a focus on central bank signals and trends in bond yields, which directly influence valuations. The third is energy prices, today the main transmission channel for geopolitical risk. For Italia, the trend of the BTP-Bund spread also remains central.
