A good investment strategy goes a long way

See how our investment strategy responds to economic and financial events.

A good investment strategy goes a long way

See how our investment strategy responds to economic and financial events.

The comeback of Small and Mid Caps

Small and Mid caps have struggled for the past 3-4 years, but the tide seems to be turning. A recovering economy and falling interest rates may provide that extra push. In particular, the attractive valuation of smaller stocks relative to large market capitalizations presents opportunities for investors. Mark Van Assche, Private Banking and Wealth Office account manager, talks about it with Anthony Cruysmans, expert European Small and Mid Caps at KBC Asset Management.


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What’s happening in the world? And what are the implications for the financial markets? 

Update July 10th, 2024


  • Most economic indicators have been below expectations in recent weeks. 
  • In the US, business confidence fell again and many indications about consumer spending were also disappointing. The growth estimate for the 2nd quarter took a big dive to barely 1.5%. 
  • In Europe, the rise in business confidence, particularly in the manufacturing sector, came to an end in June; similar scenario in China. We'll have to wait and see if this is some spring fatigue or if there's more to it.

Comodity prices - inflation


  • In both the US and Europe, the inflation trend is still on the downside.
  • Persistant underlying inflation (especially in the services sector) and recent volatile oil prices mean that the disinflation process is proceeding somewhat more slowly than previously thought. 
  • Espacially in the US, we are still seeing inflation rates surprise in the interim.


Fiscal and monetary policy

  • The exceptional stimulus programmes are being scaled back, but there is no sign of savings drift. 
  • Programmes such as EU Next Generation and the Inflation Reduction Act in the US are still substantial and continue to offer considerable support. 
  • China is also stimulating its flagging economy. 
  • Central banks in the US and Europe raised key rates at an unprecedented pace in an effort to slow growth and cool inflation. 
  • In their recent communications, the banks confirm that the disinflation process is still on track but that confirmation is needed before cutting the policy rate. 
  • As expected, the ECB cut policy rates and the Fed kept rates unchanged in June.

Bond markets

  • Interest rates appear to have peaked.  
  • However, a range of inflation data (especially in the US) cast doubt on the timing and magnitude of the expected cut in policy rates. 
  • Donald Trump's increasing chances in the race for the US presidency have also recently raised questions about the budgetary impact of his policies. As a result, we still see interest rates making occasional bucks.

Equity markets

  • The earnings report for the second quarter is coming up. 
  • For the US market, earnings growth of around 8% is expected, which is certainly achievable. The large IT-related companies in particular are driving profit growth. In the second half of the year, however, earnings increases in this market segment may be somewhat over the top and analysts expect a greater contribution from the cyclical sectors. 
  • Against the backdrop of slowing economic growth, these forecasts may be a little too optimistic.


  • However, the conflict in the Middle East and Ukraine could continue to cause nervousness. 
  • Not an easy environment, therefore, for policymakers to take decisions on interest rates. 
  • The US elections may also cause volatility later this year.

Stock markets have spurted to new records in recent days. Meanwhile, interest rates remain high, the US economy is clearly showing signs of weakening, and the recovery in Europe and China is coming to a standstill. We remain neutrally positioned.

Siegfried top, Senior Investment Strategist KBC Asset Management

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