By Silvano Grimaldi, CEO of the independent asset management firm Grimaldi & Partners AG.
Monthly Review
International equity markets ended November 2024 with mixed performance.
Factors Supporting Markets
- Protectionist economic policies: Donald Trump’s announced protectionist measures could place considerable pressure on Europe’s export-oriented economy.
- More pessimistic economic outlook: Goldman Sachs lowered its forecast for eurozone economic growth in 2025 from 1.1% to 0.8%.
- Stronger US dollar: The appreciation of the US dollar caused the euro to weaken significantly. Although this could provide short-term support to European exporters, the negative medium-term effects of higher import costs may outweigh these benefits.
These factors weighed particularly heavily on European equity markets.
Stock in Focus
Roche Remains on a Growth Path as Headwinds Continue to Ease
Roche remained on a growth path after the first nine months of the year. The Basel-based group considers itself well positioned to achieve its full-year targets.
Total revenue increased by 2% to nearly CHF 45 billion. At constant exchange rates, revenue growth amounted to 6%.
The pharmaceutical division generated revenue of CHF 34.3 billion, representing an increase of 3%.
The diagnostics division recorded revenue of CHF 10.7 billion, broadly in line with the previous year.
Strong demand was recorded for medicines including Vabysmo, Phesgo, Ocrevus, Hemlibra and Polivy. Together, these five products generated sales of CHF 13.2 billion.
Within the diagnostics division, demand remained strong for immunodiagnostic products, pathology solutions and molecular-diagnostics products.
Roche confirmed its outlook for the full year 2024. The company expects:
- Mid-single-digit revenue growth
- High single-digit growth in core earnings per share
The negative effects of biosimilar competition and the decline in Covid-19-related revenue continued to diminish.
CEO Thomas Schinecker stated that these headwinds were barely visible during the second and third quarters.
Outlook – December 2024
Opportunities
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Falling inflation: Lower inflation could allow central banks, particularly the Federal Reserve, to ease monetary policy.
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Relative attractiveness of equities: Declining bond yields could make equities more attractive compared with fixed-income investments.
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Positive seasonality: The traditional “Santa Claus rally” could support equity markets towards the end of the year.
Risks
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Economic uncertainty: Risks to economic growth remain a major concern for investors, particularly in Europe.
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Geopolitical tensions: Conflicts in the Middle East could place renewed pressure on financial markets.
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Weakness in China: Problems in the property sector and elevated debt levels continue to create uncertainty.
Performance Expectations
For December 2024, we expect an upward trend, supported by the potential year-end or Christmas rally.
Stock Recommendation: Swiss Life
This publication is provided for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any financial instrument. Past performance is not indicative of future results.
