Commentary
The vaccine roll-out allows equity markets to look through to the normalisation of economic life within a reasonable timeframe. Meanwhile any setbacks allow central banks to provide further support and stimulus measures. This provides a positive backdrop for emerging market equities together with potential for further US dollar weakness. This will be the year of vaccine winners and losers; and although emerging markets as a whole will lag in vaccine roll-outs the asset class has plenty of stocks that can benefit. China has stabilised economic growth earlier than most, due to the containment of Covid, but we believe the administration will continue to see further restrictions placed on it by a growing list of countries. Growth investing significantly beat value investing in 2020, but valuations between the two styles have become so stretched that we believe value can make a comeback boosted by a rotation into Covid-losers and the eventual normalisation of economic life. The weighted average of the price targets in the portfolio shows over 40% upside potential.
The bottom performers by contribution for the month were Indofood and JSE. Indofood (Indonesian snack food manufacturer) saw pressure on the margins of its key noodle business. Its noodle brands have dominant market share in Indonesia and fared reasonably well as a staple food but did see some trading down to cheaper alternatives and as consumers had more time to cook meals. JSE (South African stock exchange) often reflects sentiment towards the country, which can impact on trading volumes. There was no contributory company news flow to concern us. The company has a near monopoly position and a rock-solid balance sheet.
The top performers by contribution for the month were Samsung Electronics and Petrobras. Samsung Electronics (Korean electronics manufacturer) is entering the next up-cycle for semiconductors, notably DRAM, and will be a key beneficiary as the largest global producer. This month the company will release details for its updated shareholder return policy, which is likely to be generous to help the founding family with its inheritance tax bill. Petrobras’ (Brazilian oil producer) latest five-year business plan focuses on reduced capital expenditure, continued non-core asset sales, debt reduction, and concentration on the newer lower-cost deep water production assets. The oil price has rallied with increased economic activity globally and OPEC+ keeping restraint on oil production.
The top performers for the quarter by contribution are Samsung Electronics and Petrobras; and the bottom performers are Buenaventura (Peruvian miner) and Indofood. The top performers for the year by contribution are Infosys (Indian IT services) and Samsung Electronics; and the bottom performers are Embraer (Brazilian regional jet manufacturer) and Lukoil (Russian oil producer). Embraer was by far the worst performer for the year, but we believe it can survive the downturn and be a vaccine winner this year as consumers begin to fly again and its portfolio of regional jets suit the demand profile for the US airline industry.
Commentary
The vaccine roll-out allows equity markets to look through to the normalisation of economic life within a reasonable timeframe. Meanwhile any setbacks allow central banks to provide further support and stimulus measures. This provides a positive backdrop for emerging market equities together with potential for further US dollar weakness. This will be the year of vaccine winners and losers; and although emerging markets as a whole will lag in vaccine roll-outs the asset class has plenty of stocks that can benefit. China has stabilised economic growth earlier than most, due to the containment of Covid, but we believe the administration will continue to see further restrictions placed on it by a growing list of countries. Growth investing significantly beat value investing in 2020, but valuations between the two styles have become so stretched that we believe value can make a comeback boosted by a rotation into Covid-losers and the eventual normalisation of economic life. The weighted average of the price targets in the portfolio shows over 40% upside potential.
The bottom performers by contribution for the month were Indofood and JSE. Indofood (Indonesian snack food manufacturer) saw pressure on the margins of its key noodle business. Its noodle brands have dominant market share in Indonesia and fared reasonably well as a staple food but did see some trading down to cheaper alternatives and as consumers had more time to cook meals. JSE (South African stock exchange) often reflects sentiment towards the country, which can impact on trading volumes. There was no contributory company news flow to concern us. The company has a near monopoly position and a rock-solid balance sheet.
The top performers by contribution for the month were Samsung Electronics and Petrobras. Samsung Electronics (Korean electronics manufacturer) is entering the next up-cycle for semiconductors, notably DRAM, and will be a key beneficiary as the largest global producer. This month the company will release details for its updated shareholder return policy, which is likely to be generous to help the founding family with its inheritance tax bill. Petrobras’ (Brazilian oil producer) latest five-year business plan focuses on reduced capital expenditure, continued non-core asset sales, debt reduction, and concentration on the newer lower-cost deep water production assets. The oil price has rallied with increased economic activity globally and OPEC+ keeping restraint on oil production.
The top performers for the quarter by contribution are Samsung Electronics and Petrobras; and the bottom performers are Buenaventura (Peruvian miner) and Indofood. The top performers for the year by contribution are Infosys (Indian IT services) and Samsung Electronics; and the bottom performers are Embraer (Brazilian regional jet manufacturer) and Lukoil (Russian oil producer). Embraer was by far the worst performer for the year, but we believe it can survive the downturn and be a vaccine winner this year as consumers begin to fly again and its portfolio of regional jets suit the demand profile for the US airline industry.
Commentary
Capacity and flows
AUM of the strategy is now below our US$1bn capacity so we are accepting capital from investors, with priority given to existing investors and those on the waitlist, and then from new relationships. If you are interested in the strategy, please contact us.
Commentary
Commentary
Commentary
Commentary