Centifolia

September was marked by a further deterioration of the geopolitical situation in the Middle East, rising energy prices, and a widespread tightening of monetary conditions. The conflict intensified around the Strait of Hormuz before spreading to Bab el-Mandeb, where the Houthis targeted Saudi oil facilities. Despite a partial resumption of flows at the end of the month, exports of refined products remain disrupted. As a result, Brent crude rose by 14.4% to $103.50.

In the United States, economic activity remains robust, with a composite PMI at 58.4—the highest level in more than five years. This momentum, combined with rising energy prices, is fueling inflationary pressures. The Fed therefore raised interest rates by 25 basis points to 3.75%–4.00%, its first hike since 2023. Another rate hike in December is now expected. Long-term rates have risen sharply: U.S. 10-year yields have reached 5.3%, with the 10-year yield crossing the 5% threshold for the first time since 2007.

In the eurozone, economic activity also remains solid, with a composite PMI at 53.1, but inflationary pressures persist. The ECB raised its deposit rate by 25 basis points to 2.50%, while markets still anticipate several more hikes by mid-2027. Spreads between European sovereign bonds continue to widen. The 10-year Bund reached 3.62% and the French OAT 4.94%, pushing the Franco-German spread beyond 130 basis points. France is now borrowing at rates higher than those of Italy and Greece.

Against this backdrop of rising interest rates and geopolitical tensions, equity markets have declined. The Stoxx 600 fell 2.5%, while the CAC 40 dropped 4.4%. By sector, Energy (+2.8%) posted the best performance, driven by rising oil prices. Technology (+2.0%) remains buoyed by demand for semiconductors and AI infrastructure, while the rise of autonomous agents like Muse is opening up new applications but threatening several service sectors by reducing commercial friction. Conversely, the Auto sector (-8.1%) brought up the rear, weighed down by Chinese competition and the deteriorating outlook for Volkswagen and Porsche. Real Estate (-7.2%) and Financial Services (-7.1%) suffered from rising interest rates, with the latter also exposed to the risk of disruption from AI agents. Basic Materials fell by -6.7%, driven by a correction in precious metals, while Retail (-6.4%) and Consumer Products & Services (-6.8%) were also among the weakest sectors. Banks held up better, with a decline limited to -1.2%, supported by the rise and steepening of yield curves.

Year-to-date, Centifolia is up 8.84%, compared with -0.13% for the CAC 40 NR. In September, the fund underperformed its benchmark slightly, posting a return of -4.5%, compared with -4.23%.

The fund’s performance was driven in particular by Coface (+3%, boosted by rumors of interest from CNP), Dassault Aviation (+0%), Téléperformance (+1%), and TotalEnergie (+1%). Conversely, Canal+ (-18%, due to the government’s plan to raise the VAT on pay TV from 10% to 20%), Trigano (-15%, as earnings highlighted a weaker-than-expected motorhome market), Saint-Gobain (-12%, due to mistrust in the French economy), and Renault (-13%) were penalized.

Aperam and Vicat were added to the portfolio. Regarding Aperam, the tightening of European safeguard measures, the ramp-up of the CBAM, and supply discipline should support prices and allow EBITDA to normalize well above current levels. The stock also maintains a dividend yield of nearly 5%. As for Vicat, the company will benefit from strong growth in emerging markets, particularly in Africa, which is supporting earnings and has enabled the group to raise its 2026 targets. Despite this momentum and expected debt reduction, the stock remains undervalued at less than 5x EBITDA, offering attractive upside potential.

While investors continue to closely monitor geopolitical tensions and inflation, uncertainties surrounding the French budget and upcoming political events, as well as concerns regarding the government’s deficit and debt levels, have become a major source of worry. Against this backdrop of caution, we believe our preference for companies with low debt levels and the maintenance of a diversified portfolio remain appropriate. The fund has a 2027 P/E ratio of 8.5x, compared to 12.8x for the CAC 40.