Carmignac Gestion

Dear Sir/Madam,

Rarely has a financial year seemed so full of contrasts. After descending to the gates of hell until early March, markets then saw one of the biggest rallies in their history.

However, beyond the sharp ups and downs in prices that we had to manage, the most important matter seems to me to lie elsewhere. 2009 has made it clear to everyone that a major new deal has come about: the rebalancing of the global economy, underway for some ten years, has irreversibly shifted the focus of growth to emerging countries. In contrast to predictions by many economists who only 12 months ago were forecasting a worldwide recession given the unfavourable outlook for the developed economies, China and, to a lesser extent, India and Brazil have shown vigorous growth. Such is the traction power of these countries today that the key stock market is no longer Wall Street but Shanghai.

What do we anticipate for 2010? Clearly, the upturn in developed economies will reduce the activity gap against the emerging universe. But should we expect the American, European or Japanese stock markets to outperform? We doubt it. The inevitable future withdrawal of the excess liquidity injected into the financial system over recent months, will lead investors to be more discerning in their choices and to turn toward securities with the most promising prospects.

In this respect, two news items lifted me out of a gentle torpor during the Christmas lull. A Chinese high-speed train linking the cities of Wuhan and Guangzhou reached a record speed of 394 km/hr. A Korean consortium, led by the electricity company KEPCO, won a construction contract for four nuclear power plants in the Emirates. A Chinese high-speed train, Korean nuclear power plants, when shall we see a Chinese jumbo aircraft... with Brazilian technology transfer? But let's not worry. We can now count on the great boost that will be provided by our new EU President, the charismatic Herman Van Rompuy, escorted by the no less glamorous Baroness Cathy Ashton.

With these problematic expectations, I wish you all happiness and prosperity.