One good example is logistics equipment supplier Kion from Frankfurt, Germany. The share reacted to the weak performance of the previous year with a price increase of 38% in January. Alibaba, the Chinese e-commerce company, was equally dynamic. After the strictures of the communist government and the Corona lockdowns in 2022, the share price was able to soar by 25% in January. The case is similar for U.S.-based Salesforce Inc, which was negatively affected by the significant correction in software stocks last year. In January, the stock rose by about 27%.
Nevertheless, it was by no means only the previous year's losers that had a strong January. It is easy to find stocks in the LOYS funds that seamlessly continued their good run from the previous year. Good examples of this development can be found in the energy sector in particular. Service providers in the energy sector with names such as Subsea7, TGS Nopec, Tecnicas Reunidas and FMC Technip are continuing their strong upward trend that began a year ago. The same is true for Learning Technologies Group, IG Design Group, Obic Business Consultants, Teva and Hugo Boss.
Overall, the stock market benefited from declining inflation expectations, which in turn dampened the interest rate hike fantasy. The economic situation has recently shown more positive signals to the financial market as well. Instead of a significant recession, the German economy is now expected to contract only slightly. Economists even expect slight growth in the euro zone. The main cause for concern at present is the overall economic trend in the United States. It is probably no coincidence that Washington recently passed the Inflation Reduction Act, a law whose main aim is to stimulate the economy. On top of that, it should be borne in mind that China will experience stronger growth in 2023 than in 2022. The Communist Party's 180-degree turnaround in Corona policy has led to the opening and revival of economic life.
Nonetheless, the dark clouds that led to pessimistic capital market sentiment in the previous year have by no means completely cleared. On the contrary, inflation remains at a completely unacceptably high level and the Ukraine war seems far from an end. The relief in energy commodities such as coal and natural gas could also prove to be temporary, as weather factors may have played a decisive role here. Furthermore, a strengthening Chinese economy is likely to contribute to upward pressure on commodity prices and inflation in general.
Regardless of this, the three fund managers of LOYS AG believe they are well positioned to perform in the coming months through deliberate stock selection and targeted positioning in sectors and themes.
Sincerely yours,
Fund managers and co-investors
Dr. Christoph Bruns Ufuk Boydak
Chicago, Frankfurt a.M. on January 31, 2022