Market Analysis by Louis Berghmans - 3rd Quarter 2026

The third quarter was quite paradoxical.

The war in the Middle East pushed oil prices back above $100. Inflation started rising again. And interest rates increased almost everywhere in the world.

Yet global equity markets barely moved. They ended the quarter slightly higher. But behind this apparent stability, there were some significant market movements.

MARKETS IN PERSPECTIVE

China was one of the best-performing markets of the quarter, following a negative first half of the year.

South Korea and Taiwan, on the other hand, which had started the year very strongly, experienced a sharp correction over the summer. And that is precisely why we remain cautious about themes or regions that suddenly become very popular.

In the short term, markets can move very quickly. In both directions.

Rather than trying to predict which country or sector will be the next winner, we prefer to remain globally diversified. But the real shift this quarter has been in interest rates.

THE PRICE OF TIME

For more than ten years, we lived in a world where money was almost free. That period is over. Inflation in the eurozone rose again to 3.2% in August. In the United States, it reached 3.4%. The ECB raised its deposit rate to 2.5% in September. The Bank of Japan raised its interest rates to 1.25%, its highest level in more than thirty years. And government bond yields increased across virtually all major economies.

This fundamentally changes the way we need to look at companies.

Consider a company that generates substantial profits today. Now compare it with a company that loses money for several years but promises significant profits in the future. When interest rates are close to zero, waiting ten years costs very little. Future profits therefore have considerable value today. But when interest rates rise to 5%, 6% or 7%, the calculation changes completely. Profits that lie much further in the future are worth considerably less.

Nothing about the company has changed. Its products are the same. Its management is the same. Only the price of time has changed.

CASH MAKES THE DIFFERENCE

And that is an important distinction today, because corporate earnings remain very strong.

The profits of listed companies worldwide have roughly doubled since 2016. They have risen from around $2.5 trillion to more than $5 trillion in 2025. And analysts expect further strong growth through 2028. But a large part of this expected growth comes from just two sectors.

Technology and financials. That may well materialise. The latest corporate results have, in fact, been excellent. But when a great deal of optimism is already priced in, we prefer not to depend on a single scenario.

This is where cash generation becomes essential.

Free cash flow is the money a company actually has left after paying its operating costs and making its investments. This money can be used to reduce debt, pay dividends, buy back shares or finance growth, without having to turn to banks or financial markets for additional funding.

In a world where a government bond can yield 4% or 5%, a stock needs to offer something more.

A company that generates substantial cash today, can grow that cash generation over time and is acquired at a reasonable price has a very tangible advantage.

A company that does not generate cash is essentially asking you to believe in what will happen tomorrow. 

OUR APPROACH

We therefore continue to look for profitable, cash-generative companies around the world.

Without trying to guess which theme will become the next market favourite. Because if interest rates remain structurally higher, the market will increasingly distinguish between companies that generate cash today… and those that promise to generate it one day.