Publications -

Global Matters Weekly – 23 August 2021

Experts’ view on China

by Lorenzo La Posta, CFA

When you invest with so many high-quality fund managers, it’s only natural to pick their brains every now and then. We have spoken to a few of them and collected their thoughts on the current situation in China.

As a background, around nine months ago, in November 2020, Ant Financial (Alibaba’s fintech business) was ready to break records with a $37 billion IPO and an estimated valuation close to $300 billion. However, the Chinese regulators pulled the plug on it, officially because of risks around financial security. Since then, the clampdown has extended more broadly, reaching the wider internet and e-commerce sector, property developers, the ride-sharing company Didi Chuxing and the entire private education sector. Markets and more broadly investor sentiment has been under pressure and Chinese stocks are now trading at around 30% below their February peak.


Market Snapshot

  • Global equities fell -1.4% last week
  • The delta variant of coronavirus continues to weigh on
    investor sentiment, not helped by reports of weakening
    vaccine efficacy
  • Brent crude fell -7.7% over the week to $65.2 a barrel
  • Gold rose 0.1% to $1781 per ounce

Global Matters Weekly – 12 April 2021

SPACtacular surge

by Christopher Butcher

During a period of extreme volatility and a global pandemic, the initial public offering (IPO) market had a spectacular year in 2020 in terms of the number of new listings and proceeds raised, along with the rise in popularity for Special Purpose Acquisition Companies (SPACs) which have become one of the hottest investment trends on Wall Street.

Pandemic aside, 2020 has been referred to as the ‘Year of the SPAC’ in the US as the number that floated on the stock market reached an all-time high, with over $80bn raised across more than 240 SPAC listings1 . This accounted for nearly half of all listings on the US market, a significant increase compared to 2019. The momentum has certainly carried over into the start of 2021. Supportive monetary and fiscal stimulus, ultra-low interest rates and global markets at record levels have helped the US IPO market produce its busiest quarter in over two decades as issuers rush to sell while investor demand is hot and valuations high. The SPAC trend also continued, with 296 SPACs going public in the first three months of the year, already raising more capital than in the full year of 2020.


Market Snapshot

  • Global equities rose 2.4% last week
  • The IMF’s latest global economic growth outlook for 2021 was upgraded to 6.0% against 5.5% forecast in January
  • Brent crude fell -2.9% last week to $63.0 a barrel
  • Gold rose 0.9% to $1743.9 per ounce

Global Matters Weekly – 29 March 2021

Fund Selection 101

by Tom Delic

The CEO of a business has many responsibilities, two of the most important being the strategic and operational oversight of the company. Another vitally important aspect of their role is capital allocation, an area that is often underappreciated by an investor but also poorly carried out by many CEOs. When researching a fund, it is often useful to view the fund manager as a CEO of a conglomerate, responsible for making investments in a portfolio of businesses, with none of the strategic and operational pressures, thereby making capital allocation of primary focus. Viewed through this lens, making an investment through a fund is a partnership with the fund manager, who you are entrusting to manage the capital of your clients in the best possible way. Just like the listed equity markets represent a huge variety of businesses that you can choose to own a piece of, a universe of funds represents a list of potential long-term business partnerships. Below is a summary of a growing body of studies that can help form a filter for the universe when picking who you should partner with.


Market Snapshot

  • Global equities rose 0.7% last week
  • The global coronavirus case count continues to rise steadily, with European Commission President von der Leyen announcing that “we’re at the start of the third wave of the pandemic”
  • Brent crude rose 0.1% last week to $64.6 a barrel
  • Gold fell -0.7% to $1732.5 per ounce

Global Matters Weekly – 22 March 2021

Bailey, Powell and Lagarde; the new eco-warriors?

by Robert White, CFA

For all the column inches dedicated to central bank meetings this month, one potentially seismic change to monetary policy has slipped under the radar over the last few weeks. In the most recent UK budget, chancellor Rishi Sunak announced that the Bank of England should reflect the “importance of environmental sustainability”1 in policy decisions, which includes asset purchases. The prospect of central banks determining which assets to support based on environmental credentials points to a significant increase in the importance of environmental, social and governance (ESG) factors for investors, and also raises questions about the appropriate role of central banks going forward.


Market Snapshot

  • Global equities fell -0.4% last week
  • Government bond yields continued to rise around the world
  • Brent crude fell -6.8% to $64.5 a barrel as demand flags in key markets
  • Gold rose by 1% to 1745.2 per ounce.

Global Matters Weekly – 15 March 2021

Why we are all hard wired to be bad investors

by Gary Moglione

Investing our savings is an extremely important part of life that will have a strong influence on retirement, home ownership and the quality of our lifestyle. Therefore, you would expect us to have evolved to be efficient investors. Unfortunately, we are hard wired to be bad investors as many of our natural instincts force us to fall into a number of behavioural traps that result in poor investment returns. The first one is herd mentality. This becomes more prevalent at points in the cycle when retail investors are highly active as investment tips get passed on in workplaces, pubs and dinner parties. Everybody has heard stories of people getting rich investing in Bitcoin or technology stocks that has made them motivated to get involved. A small number of high-profile stocks have posted stellar returns in recent years. As a result, valuations have been pushed up ever higher. Higher valuations should spark caution when investing but the reverse actually takes place. People talk about their gains to friends and family sparking more interest in a stock. This causes the share price to rise even further detaching it from intrinsic value. We have witnessed this many times before with the ‘nifty fifty’ period in the late 1970’s and the tech boom in the late 90’s. Dare I say we are in a similar environment at the moment.


Market Snapshot

  • Global equities rose 2.9% last week
  • OECD revises up 2021 global growth forecast to 5.6%, an increase of 1.4 percentage points from the OECD’s December forecast
  • Brent crude fell -0.2% last week to $69.2 a barrel
  • Gold rose 1.6% to $1727.1 per ounce.

Global Matters Weekly – 8 March 2021

Percy’s not a pig

by Alex Harvey, CFA

A little over a fortnight ago history was repeated when NASA’s Jet Propulsion Laboratory (JPL) successfully landed a rover on the Martian surface. After a near seven-month journey across 300 million miles of space, at a gentle cruising speed of nearly 25,000mph, the rover touched down on 18th February. Perseverance – or Percy for short – was lowered on to the surface by a sky crane, like its cousin Curiosity in 2012, in a feat of incredible human engineering. Of the now five successful JPL rover landings (yes, five!), this was the most accurate ever and was enabled through the experience gleaned over previous rover missions. [If you want to see the landing in real time from the onboard cameras see the link in the footnote1 . It is remarkable to watch and with probably better resolution than my phone].


Market Snapshot

  • Global equities ended the week relatively flat, returning +0.1%.
  • The US Senate has passed President Biden’s $1.9 trillion Coronavirus stimulus package.
  • Brent crude rose by +4.9% to $69.4 a barrel.
  • Gold fell -1.9% to $1700.6 per ounce.

Global Matters Weekly – 1 March 2021

Are you sitting comfortably?

by Richard Parfect

As I write this there is a good news story of a B777 executing a successful diversion and emergency landing following the dramatic loss of one of its two engines. Somewhat unnervingly for passengers the remnants of the burning engine were clear to see. More seriously there was fuselage damage too, however the pilots’ frequent rehearsed emergency procedures and risk controls prevented a catastrophic outcome. Passenger unease is understandably common on aircraft, particularly if the aircraft enters clear air turbulence. Whilst even significant buffeting is normally well within design limits of the aircraft, passengers can become alarmed that something catastrophic will befall them. However, the best thing passengers can do is sit back, try and relax and trust in the professionalism of the pilots and engineers; the turbulence will pass.


Market Snapshot

  • Global equities fell -2.8% last week
  • 10-year US Treasury yields rose 14.4bps on Thursday in their biggest daily move since March 2020, before falling -11.5bps on Friday. The substantial moves were driven by real rates increasing, rather than higher inflation expectations
  • Brent crude rose 5.1% last week to $66.1 a barrel
  • Gold fell -2.8% to $1734.0 per ounce.

Global Matters Weekly – 22 February 2021

Coin toss

by Andrew Hardy, CFA

Digital gold or “index for money laundering1 ”? Fiat currency hedge or irrational mania? Bitcoin divides opinion more than most, but the bulls are in the ascendency at present and the 12-year old cryptocurrency is gathering many new followers as a result. Its 6-fold increase in price in the last year has been the driver; creating a FOMO (fear of missing out) effect whilst also increasing the size of its market, which reached $1 trillion over the weekend, to a level where institutions begin to consider it more seriously. While we expect that cryptocurrencies will become more mainstream over the coming years, we’ve never held Bitcoin in portfolios, nor do we have any plans to include it. I’ll provide a few thoughts around this here.


Market Snapshot

  • Global equities returned -0.4% last week whilst global bond yields rise.
  • The Pfizer-BioNtech vaccine is reported to be 89.4% effective in preventing Covid-19 infections according to an Israeli study.
  • Brent crude oil rose 0.8% to $62.9 a barrel.
  • Gold fell -2.2% to $1784.3 per ounce.

Global Matters Weekly – 15 February 2021

More of the Same

by Richard Stutley, CFA

Quote: “just right, then, is a continuation of current policy and hence central bankers need to hold their nerve in the face of rising inflation and provide more of the same”

The tale of Goldilocks and the Three Bears was a popular analogy in markets in the years post the Great Financial Crisis, used to describe the global economy as not too hot, not too cold, but just right. Extending the idea to today’s central bank policy: too hot would be embarking on helicopter money or large scale debt forgiveness; too cold would be abandoning tools like quantitative easing, possibly in response to criticism of QE’s role in fuelling asset price bubbles; just right, then, is a continuation of current policy and hence central bankers need to hold their nerve in the face of rising inflation and provide more of the same.


Market Snapshot

  • Global equities rose 1.7% last week
  • The US Senate acquitted former President Trump of incitement to insurrection
  • Brent crude rose 5.2% last week to $62.4 a barrel
  • Gold rose 0.6% to $1824.23 per ounce

Global Matters Weekly – 8 February 2021

To the moon – YOLO

by Lorenzo La Posta, CFA

Tuesday 26th January, it’s early morning here in the UK and still night in the US when Aurelio, a friend of mine, texts me.

Aurelio: “Dude, what is going on with Game Stop? Last week some people on Reddit said they were gonna shoot GME (ticker for Game Stop) to the moon, to $1000 per share! So, I bought a few at $45 on Friday…”

I had not heard anything about Game Stop, so I start by checking the share price: it closed at $77 yesterday, +285% in the past two weeks! Ok, something’s off. I spend a few minutes on r\ wallstreetbets to get a grasp of what apparently is suddenly becoming a coordinated action in one of the largest online communities. I see people yelling stuff like “Let’s get GME to the moon!”, “We own you, hedge funds!”, “HOLD TILL $1000 – AT LEAST” and loads of “YOLO” (i.e. you only live once). Some people are even posting screenshots of their six digit $-gains made over just a few days. I can get back to Aurelio now. He’s no investment expert, yet he’s smart enough to understand what’s going on.


Market Snapshot

  • Global equities rose +4.2% last week
  • Concern mounts after limited trials show the Oxford/AstraZeneca vaccine doesn’t protect against mild/moderate illness from the South African mutation
  • Brent crude oil rose +6.2% to $59.3 a barrel
  • Gold fell -1.8% to $1847.1 per ounce