In a largely uncertain global macroeconomic environment, we remain cautious for 2023 and adopt a relatively defensive stance.
In a context where interest rates should rise less than in 2022, the telecom tower companies that underperformed last year should perform well. They will benefit from their defensive nature, as well as from their ability to weather inflation, notably INWIT which is our top pick in the sector.
On the global inflation front, we believe that the worst is behind us. The US, under the impetus of a very aggressive central bank, has managed to bring down its inflation rate faster than Europe: from 9.1% in August 2022 to 6.5% in December, compared to 9.2% in Europe at the same date.
This should push the ECB to continue to raise its key rates, while the Fed should slow down its rate hikes. This will benefit the euro against the dollar, which leads us to reduce our exposure to the US currency somewhat for the current year.
In 2023, the consequences of the invasion of Ukraine will continue to weigh on global energy markets. However, with very high gas storage levels in Europe, thanks to a mild winter, we do not expect stratospheric price levels as we have seen over the past summer.
Nevertheless, volatility should remain high, which will benefit the integrated players that we favour for this year, as well as LNG exporters whose production will be growing strongly over the coming years and which are trading at very decent valuations.
In Europe, we favour companies that will benefit from the energy crisis, particularly renewable energy companies. The latter will benefit from an accommodating European policy aimed at accelerating the deployment of renewable energies and thus position themselves as the European equivalent of the American Inflation Reduction Act.
In this respect, we are positioned on pure players (Acciona Energia, Solaria Energia among others), as well as on integrated utilities which have a significant part of their profit growth coming from renewables: RWE and Engie in particular.