The month of June was marked by a downturn in European markets, again due to concerns over geopolitical and trade tensions, and of course to the prospects of an economic slowdown in the USA in particular. As expected, NATO members have adopted a spending target of 5% of GDP by 2035, including 3.5% for "pure" defense and 1.5% for related investments (cyber, infrastructure). Uncertainties persist as to the ability, or even willingness, of certain states (e.g. France, Spain) to meet such a target. The weakening dollar is a worrying factor, since if the trend were to continue, the impact on the 2005 and 2026 forecasts would clearly be negative on the accounts, and therefore on the share prices of international groups.

The Paris Air Show was one of the major events of June. In the civil aircraft sector, without exception, all the players mentioned a clear improvement in the production chain, with delivery rates now close to the pre-covid period. In terms of customs tariffs, the message was also reassuring, as companies showed flexibility in finding countermeasures (exemption, price increases, reorganization of logistics flows). Maintenance services and spare parts sales are buoyant, thanks to a tight supply and intensive use of aircraft in operation. This favorable environment explains why German engine manufacturer MTU Aero Engines has raised its 2025 targets (sales €8.6 - €8.8 billion versus €8.3 - €8.5 billion). During the Investor Day, the Group unveiled its 2030 targets for the first time, which came in above consensus expectations.

In the wake of a NATO summit that came as no real surprise, the Defense sector was the subject of profit-taking, quite logical in view of recent performance. As a result, newsflow will dry up somewhat for a few months, pending the autumn budget vote and the probable award of contracts in 2026. The fund's exposure is around 6%, half of which is invested in a Swedish midcap, Invisio. Invisio enjoys a de facto quasi-monopoly in Audio equipment for special forces. However, the armed forces are beginning to generalize the use of this equipment among the infantry as a whole. Similarly, NATO members will be spending much more on armored vehicles, and Invisio has a growing market share in communication systems for this vertical. It will take some patience for orders to be budgeted and awarded, but we anticipate very strong growth over the coming years.

The 2(nd) quarter publication season is approaching, with its share of "challenges", particularly in the USA. Indeed, it would be logical for consumers to be cautious, and for certain investment decisions to be postponed in the absence of visibility on the trade policy initiated by the new administration.

We will also be keeping a close eye on the development of prescriptions for Novo Nordisk's Wegovy in the USA. The gradual disappearance of "compounders" (generic copies temporarily authorized during periods of shortage), the start-up of the contract with the CVS mutual insurance company and the establishment of a direct sales network (NovoCare) should revitalize sales growth for the Obesity franchise in the USA. The pharmaceutical sector as a whole has sorely underperformed since the start of the year, due to uncertainties over tariffs and prices. These concerns seem to us to be exaggerated and already well reflected in valuation multiples, but we'll have to be patient to obtain clarification on these thorny issues.