Market Dynamics: Bets, Elections, and Geopolitical Impacts
After months of anticipating an imminent downturn, commentators now struggle to find concerning elements in the scenario, as the stock market continues its positive trend, with major indices reaching historic highs. But as Sun Tzu said in The Art of War, “The greatest danger is that which cannot be seen.”
The market is facing two major bets: the first concerns the increasingly widespread theme of artificial intelligence, with companies in the sector achieving enormous capitalizations and transforming global stock market dynamics; the second concerns the market’s expectation that interest rates will decline over the year, awaiting monetary policy decisions from Central Banks.
In short, the economic landscape presents challenges and uncertainties, including risks stemming from a potential increase in inflation, geopolitical tensions, and the numerous elections worldwide expected in 2024, which will significantly influence financial markets.
Therefore, it is essential to carefully consider, in investment management, possible tail events and risk factors for the economy, participating in the market with greater prudence and selectivity.
Discover why! Watch the analysis conducted by Lorenzo Fuscà, Head of Wealth Management, and Stefania Cardone, Investment Advisory at Banca Profilo.
WHO’S WHO by AssoNEXT – Banca Profilo
On March 21st, Banca Profilo had the pleasure of hosting the WHO’S WHO event by AssoNEXT.
It was a magnificent opportunity to delve into success stories and listen to the experiences of some of the brightest entrepreneurs and managers in Italy. Additionally, we witnessed moments of discussion with leading Italian institutional investors, from which constructive proposals emerged to make the EGM more attractive.
Thanks to all those who participated and made this evening a real success: Antonio Amendola, Dario Melpignano, Gian Paolo Rivano, Luca Mori, Luisa Franceschetti, Maurizio Ciardi, Paolo Rizzo and Walter Barbieri.
DigitHer and Female Empowerment
Banca Profilo is proud to support DigitHer, a comprehensive and accessible online training program for female empowerment in the digital world, promoted by Valore D and Generation Italy and funded by the Digital Republic Fund.
Why DigitHer? We believe in the importance of closing the gender gap in the technology sector and providing women with opportunities to excel in this field. Thanks to our colleagues, IT Solutions & Delivery Specialists Elisabetta Campiotti and Marta Lodi Rizzini, who participated in the project, sharing their educational and professional journeys with the participants.
For more information on Valore D, which the Bank has been supporting for several years, visit their website.
The semiconductors and the inflation uncertainties
For about a year now, the stock market has only rewarded passive instruments, focused on a few large titles primarily in the semiconductor sector. Semiconductors have thus become the true market beta, overshadowing active management and alpha generation.
It’s a pricey sector where only a few major players dominate, such as Nvidia and Taiwan Semiconductor, which has seen revenue projections increase by over 25%. However, not all semiconductor companies are celebrating; those still anchored in traditional business models, like Intel, have faced greater challenges. Therefore, the exuberant trend of Artificial Intelligence is not as irrational as the dot-com bubble.
While acknowledging the logic behind some trends, 2024 might see a return of active management: with a bit less beta and a bit more alpha in portfolios.
Approved the preliminary results of 2023
The main objectives of the 2020-2023 Industrial Plan have been achieved, highlighting the digital transformation process and commitment to sustainability and corporate well-being.
Net revenues solidify at 76.6 million euros (+8.5% y/y) with a net profit of 12.1 million euros (+8.9% y/y).
Operational management results also show growth, reaching 20.5 million euros (+11% y/y), with a Cost-Income ratio reduced to 73.3%. Customer deposits reach 6 billion euros (+6.7% y/y). CET1 ratio at 22.3%, confirming the financial strength of Banca Profilo.
Read the press release: https://www.bancaprofilo.it/wp-content/uploads/2024/02/2024_02_08_CS.pdf
EGM Analysis 2023
The negative performance divergence between EGM and FTSE Italia All Shares widens.
In 2023, EGM surpassed 200 companies with 34 new IPOs, up from 26 listings in 2022. Total capitalization exceeded €9 billion, but averaged just below €40 million.
In 2023, the negative performance divergence compared to the FTSE Italia All Shares widened due to 1) limited liquidity; 2) loss of some benefits; 3) alternative financial activities that are more profitable as they are linked to the trend in interest rates.
Since 2021, EGM companies have shown growing revenues which are expected to continue in the three-year period 2023-2025 at an average rate above 15%, the EBITDA margin is estimated to recover already in 2023 until exceeding 2021 levels this year. Compared to our latest EGM Quarterly Report, consensus has lowered revenue and EBITDA expectations for 2023 and 2024.
Growth continues to be partly supported by M&A activity: in the last two years, on average, around 60 deals have been concluded.
What is needed to make a market segment that hosts Italian SMEs with high growth potential and good margins attractive? Find out the report by Francesca Sabatini, Head of Equity Research, and Michele Calusa, Equity Research Analyst of Banca Profilo.
Bonds, Stocks and AI Innovation
The year 2023 has certainly been a year full of surprises. Among them, the United States and Europe managed to avoid recession, and China missed the economic boom post-reopening.
Meanwhile, the growing significance of Artificial Intelligence (AI) continues to offer potential revolutions, as demonstrated by ChatGPT, providing the ability to generate unique content without the need for programming. This automation impacts labor dynamics.
The convergence of AI and investment management is creating a unique synergy, enhancing operational efficiency, empowering investment decisions, and contributing to innovation and economic growth. This showcases how Artificial Intelligence is not a threat but a powerful ally in enhancing human creativity and decision-making.
They explain this in the video, Lorenzo Fuscà Head of Wealth Management and Linda Gentili, Portfolio Manager at Banca Profilo.
