The Brexit, as well as other macro-economic trends, such as the possible escalation of trade wars, are increasing the pressure on profit margins even further. 29% of the participants of the B2B research says that Assets Under Management for institutional clients increased by more than 10% in the first half of 2018 compared to 2017. That figure is the lowest in the latest three years.

�Today, we as well detect a number of early warning signals,� says Matthew Lovatt, Global Head of Framlington Equities and Member of the AXA IM Management Board.  �More specifically related to an increasing pressure in certain growth markets due to stricter financing conditions.�

Growing and stabilising markets

Still, AXA IM looks at the future positively. Matthew Lovatt: �Various indicators suggest a growing market in the US, as well as a stabilisation of the European market during the second half of 2018 � which is supported by new figures showing strong industrial production. The global growth and the company profits are better than expected, which in turn is positive for shares.�

The global growth and company profits are better than expected.

MATTHEW LOVATT
AXA INVESTMENT MANAGERS

The war for talent

Finally, there is the war for talent. This is very sector specific. Still, as a result, AXA IM sees inflationary pressure developing. Lovatt: �In Europe and the US, there is increasing salary pressure, which combined with the low unemployment rates, can feed the inflation. But for the time being, there is no evidence that this will result in lower profit margins.�