Navigating your investments after market turbulence
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AI Could Be the New Profit Driver for Digital Platforms
In recent years, artificial intelligence has become one of the most important topics in the technology sector. While much of the attention is focused on model developers and companies providing infrastructure, the long-term winners in this technology may also emerge on the application side. The interactive media segment is particularly interesting from this perspective, as the business models of companies operating in this field rely heavily on monetizing user attention and producing digital content. In the second part of our industry analysis series, we review current trends and potential catalysts affecting search engines and social media platforms.
European Software Companies Are Set to Make a Comeback
European stock markets are currently outperforming their U.S. counterparts, and thanks to the gains of the past few days, our screenings have identified a number of interesting stocks. Among these, we have highlighted stocks that have recently shown signs of a structural turnaround, while strengthening buying pressure is also supporting the positive technical picture. One such company is Germany’s Nemetschek, a leading provider of construction and architectural design software. The other is the Dutch firm Wolters Kluwer, which offers professional information, software, and specialized database solutions. For both stocks, the search for long entry opportunities may have begun.
The outcome of trade negotiations remains uncertain, and although the worst outcome can be avoided, historically unprecedented high tariffs are still to be expected. Global growth is expected to slow, but many countries are still trying to offset this with high budget spending, which could lead to sticky inflation in different ways across regions.
Macro
In the US, expectations point to a wide base slowdown in economic growth this year and next, to around a below-potential 1.5% rate. The tariff war is taking it’s toll through rising uncertainty on investments and consumption. In the Eurozone tariff war could slow down YoY growth to around 0.5%. Full year growth could be just below 1%. The inflation outlook is on target in Europe and above target in the US, where it is also rising. Upside risks are present due to oil prices, geopolitics, tight labour markets and loose fiscal policies. The priced in USD rate trajectory is far from a done deal, for the two cuts this year, recession pressures should get stronger. In Europe, fiscal spending could drive yields further up. In Hungary we revised down our 2025 GDP growth forecast from 2% to 0.6%, inflation can be around 4.5%. In the summer, we expect pro-HUF forces could remain strong. The carry will be kept at high levels, and we do not expect any policy shift. Regarding the long end of the yield curve, we suggest a cautious approach.
Equities
Although tougher-than-expected tariff announcements in April caused a significant decline in global stock markets, it soon became clear that the pain threshold was not so far away, where US policymakers started to refine their approach. Stock markets recovered in a V-shaped way, and now again have above-average valuation, with supportive but weakening profit growth. The positioning is neutral, with upside and downside risks balancing each other. The US growth advantage over the rest of the world is diminishing, but fiscal policy has remained expansionary, so the risk of recession is low. Europe is cheaper, but the repricing may be hampered by US trade negotiations, stronger euro, lagging profit growth, and falling behind in the AI race. EM’s recent tailwinds may weaken, but CEE is still cheap enough to hold our overweighted recommendation.
Bonds
The growth-slowing effects of tariffs and the growth-stimulating loose fiscal policies may influence inflation risks and central bank policy options differently across regions. Due to significant politically driven uncertainties, it is worth maintaining neutral bond exposure, favoring short/medium maturities.
Commodities
The number of sectors that have performed well this year has clearly widened. However, economic uncertainties have not yet disappeared, so the commodity rally looks somewhat fragile and some caution may be warranted, selective exposure is recommended (e.g. we still favour gold, copper, uranium).
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