The art of controlling inflation

The markets, polling institutes, and even bookmakers woke up this morning taken against the foot (preopened at-12% on Eurostock 50) by British voters who made the choice to leave Europe. The convinced Europeans and the managers were still asleep last night lulled by the strong rise of the markets and the certainty that Europe would triumph…

It is too early to draw the consequences of a process that will take years to be effective, however:

In the short term, markets over-react to correct their erroneous expectations and to deal with cyclical sales. Pergam took advantage of this opportunity to slightly increase the exposure of some of its portfolios on the Euro Stoxx 50 index and to buy some particularly mistreated values such as Accor or Saint Gobain in particular. Very short-term opportunistic operations have been carried out to take advantage of the exceptional volatility of certain listed values.

In the medium term, we monitor the behaviour of UK values exposed to the pound Sterling or impacted by the questioning of trade agreements. On the other hand, some values will constitute investment opportunities that we follow. Gold, currencies such as the Dollar or the Swiss Franc play their role as a refuge value in the same way as German rates which are 10 years in increasingly negative territory (-0.08%).

Overall, we are wondering about the risks of spreading this vote, domino effect, to other European countries generating a disturbing political instability in the financial markets. Some voices within the United Kingdom are already asking for their independence because they deem the Brexit to be contrary to their own interests.

To follow…

Aymeric DIDAY
Director of management under mandate

Finished writing at 14h on 24/06/2016