Five questions to Norman Villamin

1. The global economy is in good shape. Can it still be improved?

The starting position is actually astonishingly good. In Europe, the economy is growing by 2%. Only two years ago, no one would have expected such a rate of growth. And the situation may improve further. The planned labour market reforms in France, for example, could contribute to this.

2. Are the recent debt ceiling discussions in the US a cause for concern for investors?

It looks like the problem will be postponed until December. If you look back in history, when it happened before, the stock markets saw some volatility but rebounded quickly. The big declines around debt ceiling occurred when rating agency Standard & Poor’s downgraded the credit rating of the USA. We do not anticipate that this time around.

3. Stock valuations, especially in the technology sector, are currently high. Doesn’t that call for a correction?

US technology stocks can be divided into two groups. The first is the established companies that generate a lot of cash. In their case I believe that the valuation is reasonable and not exaggerated. Investors should be cautious with the newer companies, on the other hand, as they’re still making losses and are more ambitiously valued.

4. Are there markets or countries that are actually still rated favourably and offer potential?

It has become very difficult to find something that is really cheap. However, valuation is only one aspect; another decisive factor is how corporate profits develop. The US stock market indices have risen sharply, but not valuations because profits have also risen. We believe that European equities are attractive in this respect, because there is still room for profit growth. And they will increase when the reform effects kick in.

5. Which sectors should we focus on?

If the economic situation in Europe continues to improve, small and mid-caps focused on the domestic market will benefit the most. The outlook is also brightening for banks, which means that they will have more available capital again and will be able to take advantage of opportunities.

- Translation of an interview published in German -