Carmignac Portfolio Emerging Patrimoine

In the United States, the labour market continues to show strength, with the unemployment rate falling to 4.0%. At the same time, inflation rose to 3.0% year-on-year.

On the political front, Trump has begun to implement his program, starting with an increase in tariffs on Mexico, Canada, China and Europe, which is expected to come into effect in the coming months.

In addition, talks on a ceasefire in Ukraine have begun, with Trump engaging in negotiations with Russia, a first since the start of the war in 2022.

Against this backdrop, emerging equities and bond markets were up.

On the equities side, the markets were driven by the Chinese markets (+13.6% for the Hang Seng). Indeed, the Chinese markets continued to make good progress following the announcements of the giants Alibaba and Tencent, which in turn unveiled their own AI model, driving tech stocks upwards.

Finally, on the currency front, the US dollar continued its slowdown in February, which began at the start of the year, against a backdrop of moderation in US exceptionalism. This situation benefited the euro and certain emerging currencies.

In this context, the Fund recorded a positive performance, outperforming its reference indicator.

On the local debt side, we benefited from our positions on Mexican, Indonesian, and Hungarian local rates.

Our credit exposure made a positive contribution, benefitting from our allocation to corporates in the financial and energy sectors and our selection of EM hard currency bonds.

On the other hand, our positions on Argentine debt and the protections we put in place to reduce our credit exposure had a negative impact.

On the equities side, we benefited from our Chinese stocks (VIPShop, Beike) as well as our Mercadolibre position, which saw its share price rise following the announcement of its quarterly results, which exceeded expectations.

On the other hand, we were penalised by the declines in our Indian stocks as well as in the semiconductor giant TSMC.

In a context of resilient global growth and gradually declining inflation, we expect the main central banks of developed and emerging countries to gradually continue their monetary easing. As a result, we are maintaining a relatively moderate modified duration (around 400 basis points), which is slightly lower than last month.

On local rates, we continue to favour central banks that are lagging the cycle, such as Brazil, Indonesia and some Eastern European countries (Poland, Hungary) that benefit from high real rates and will be affected by a potential ceasefire in Ukraine.

On the emerging external debt front, we are cautious about longer-term investment grade debt, as spreads are already relatively tight. That said, we see opportunities among rated high-yield securities, such as South Africa, Côte d'Ivoire and Colombia.

On the equities side, we are maintaining a significant allocation to India, where the long-term outlook remains promising.

Our trip to India confirmed our view of the country's promising outlook, and the recent correction is offering us some interesting entry points. We are gradually increasing our exposure to the country by initiating a new position in PB Fintech (Policybazaar), the leading online insurance broker, offering a unique online insurance brokerage platform in India, where the penetration rate of life and health insurance is among the lowest in the world.

In China, we are maintaining a measured allocation, slightly below our reference indicator. Our Chinese portfolio is made up of consumer companies that are mainly focused on the domestic market and are therefore not affected by the US tariff increases.

Over the period, we have slightly increased our equity exposure.

Finally, regarding currencies, we maintain a significant allocation to the euro, with reduced exposure to the US dollar. We remain selective on emerging currencies, with exposure to the currencies of central banks that are less accommodative, while the Fed continues its monetary normalisation, and China implements stimulus measures with a selection of currencies from Latin America (BRL, MXN, CLP) and countries in Eastern Europe and Central Asia (PLN, KZT).