Editorial - June 2024


Temps de lecture : min

Balance of forces

In a world where multiregionalism is gaining momentum, where free trade is being undermined by the quest for national sovereignty and the accompanying distortion of competition, the balance of forces between States and companies is shifting. This environment is profoundly transforming the decision-making framework in the private sector.

ASML, the largest capitalisation in the euro area and global leader in equipment for the semiconductor industry, has been at the centre of the clash between China and the United States for several quarters. The United States put pressure on the Dutch government and the company to limit sales of machinery to China due to the strategic nature of its products. ASML was forced to comply under pressure from its own government.

« This is but one example illustrating the return of 'Politics' and the challenging of liberalism; a trend we have been describing for nearly a decade now in our Economic and Financial Outlooks. »


It would be wrong, however, to think that companies have lost all capacity to take advantage of this environment, in which governments are competing hard to relocate strategic industries. At the end of March, ASML demonstrated its ability to sway the Dutch government to its own advantage. The company threatened to relocate, as the conditions for its continued growth in Holland were no longer adequate. It highlighted the poor quality of infrastructure and its need to attract foreign skilled labour to the Netherlands, which certain measures of the newly elected government were likely to thwart. A few weeks later, the government was forced to announce a €2.5 billion investment plan to meet the company’s requirements. More recently, TotalEnergies, following in the footsteps of Shell, raised the possibility of being listed in the United States. Mr Pouyanné, the Chairman, justified his thinking by pointing out the need to secure financing and valuation conditions for the firm as favourable as its US competitors in order to maintain its competitiveness. In Europe, the regulatory framework for financing energy companies has become more complex, while the US has at the same time become the world’s largest producer of oil and gas. These announcements made a lot of noise. Losing the listing of large companies would have significant implications for the financial ecosystem of the countries concerned, at a time when the issue of financing has become a major political objective in Europe.

« The competition between China and the United States is changing the terms of global trade. »


Europe and its companies must react and adapt, which can spark confrontation between public and private players. Sources of disagreement are unlikely to dissipate over the coming months, as Member States seek to finance their industrial policies. This could see them turning to private companies and favouring those whose ability to relocate is more limited. These issues surrounding competitive distortion and its impact on company strategies and on our asset allocation will be discussed in detail in our forthcoming Economic and Financial Outlooks.

Written by
Jacques-André Nadal

Jacques-André NADAL
Deputy Managing Director in charge of Asset Management

June 17th, 2024

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