Imperium Capital Publication

Global Matters Weekly – 21 September 2020

Staying out of the rough
by Michael Clough

This year has obviously been far from normal and the Covid pandemic meant the US Open, normally held in June, was pushed back to a late summer week in September. The US Open is regularly dubbed the ‘toughest test in golf’. One of the reasons is long, thick grass (known as rough) which sits unsettlingly closely to the finely manicured fairways, punishing any marginally errant shot. Within equities, growth exposure has been the equivalent of finding the fairway this year, whilst sole exposure to value has been akin to hacking through the deep rough.

Market Snapshot

  • Global Covid-19 infections exceed 30 million with the global death toll approaching 1 million.
  • A mixed week saw global equities ending the week flat
  • Brent crude rose 8.3% to $43.2 a barrel
  • Gold rose 0.5% to 1950.9 per ounce

Global Matters Weekly – 14 September 2020

by Richard Stutley, CFA

Realpolitik is the art of designing policy based on practical rather than ideological considerations: what works, not what we think should work. Pragmatism is an important part of investing and tells us that positioning too aggressively around political events like Brexit and the US election is risky, because both the result and the market outcomes are difficult to predict. Given a low probability of correctly predicting either, we need to see evidence of significant mispricing in order to introduce large positions in our portfolios.

Market Snapshot

  • A mixed week for global equity markets which returned -1.3%
  • Vaccine trials resume after last week’s pause
  • Brent crude fell -6.6% ending the week at $39.8 a barrel
  • Gold rose 0.3% to end the week at $1940.5 an ounce

Global Matters Weekly – 7 September 2020

Yellow metal, green lights
by Andrew Hardy, CFA

Gold has outshone most other investments in 2020, having broken through to new all-time highs in July, surpassing levels last reached nearly 10 years ago. Year to date the bullion price has increased by 27%, trumping all broad equity markets and most other assets – only the tech heavy NASDAQ index has kept pace. Over five years, gold has risen by over 70%. Today’s market and economic conditions go a long way towards justifying these gains though and we remain committed holders within our multi-asset portfolios.

Market Snapshot

  • After their best month since April, US equities fell back last week
  • The CDC in the US has warned health officials to be ready to distribute a vaccine by the 1st November to at-risk individuals
  • Brent crude fell -5.3% ending the week at $42.7 a barrel
  • Gold fell -1.6% to end the week at $1933.9 an ounce

Global Matters Weekly – 24 August 2020

The road map to success
by Stephen Nguyen, CFA

At today’s historically low yield levels, bonds offer significantly less protection and diversification benefit compared to the past. In this new low rate environment, the traditional ‘balanced’ portfolio may no longer be balanced. We spend a lot of time deriving the optimal SAA for our clients. Our optimisation is multi-faceted and goes beyond simply maximising returns for a given amount of risk. We include a wider range of asset classes in our SAA’s to increase the naturally occurring diversification benefits and consider how those asset classes behave in combination with one another. Based on these optimisation metrics, we then generate thousands, sometimes millions, of possible portfolio combinations.

Market Snapshot

  • A mixed picture as global equities returned 0.4% last week
  • Global deaths from Covid-19 surpass 800K
  • Brent crude fell 1.0% ending the week at $44.4 a barrel
  • Gold fell -0.2% to end the week at $1940.5 an ounce

Global Matters Weekly – 17 August 2020

Fast forward 10 years
by Jackson Franks

Former R&B singer and now entrepreneur Akon, announced in January 2020 that his vision to develop Akon City is becoming ever closer to reality. Situated in a small coastal village in the west of Senegal, Akon City will be 100% cryptocurrency based with AKoin (a cryptocurrency established by Akon) at the centre of all transactional life. Although I don’t see the world being run on cryptocurrency anytime soon, I do believe the real estate assets we see today will look and feel very different ten years from now.

Recently, Simon Property Group, a mall operator, announced they are in talks with Amazon about turning their department-store sites into Amazon fulfilment centres.

Market Snapshot

  • The S&P 500 index moved to within 0.2% of its all-time high in February
  • Russia announced regulatory approval for a vaccine – the first country to do so
  • Brent crude rose 0.9% ending the week at $44.8 a barrel
  • Gold fell -4.4% to end the week at $1945.1 an ounce

Global Matters Weekly – 10 August 2020

Safe Hands for Troubled Times
by Robert White, CFA

In a world where unprecedented events seem to be happening with regular occurrence, it is more important than ever to find stewards of capital with the talent, temperament and expertise to navigate through such uncertain times. This is no easy task and recent studies have reminded us that past performance in isolation is not a sufficient guide. Here at Momentum, we believe the key lies in thorough due diligence backed by an experienced and independent research team.

Market Snapshot

  • The tech rift between the US and China intensified last week.
  • A positive week for markets as global equities rose 2.2%.
  • Brent crude rose 2.5% ending the week at $44.4 a barrel.
  • Gold rose 3.0% to $2035.5 an ounce

Global Matters Weekly – 3 August 2020

Spaghetti Western
by Lorenzo La Posta

“Year 1862: amid the chaos of the American Civil War, the three gunslingers Blondie, Angel Eyes and Tuco (a.k.a. the Good, the Bad and the Ugly) are competing to put their hands on a buried cache of gold, but onl– “…wait! I got it wrong. It was something like: “Year 2020: amid the chaos of a global pandemic, some industries thrive (the Good) as others go through a rough patch (the Bad), while countries, economies and societies strive to recover from their wounds (the Ugly)”. This year, the outcomes have been more extreme than most Hollywood creations. Let’s just hope there will be no sequel to this tragic period.

Market Snapshot

  • The US Dollar had its worst month for a decade
  • Moderna has begun its late-stage vaccine trial on 30,000 people in the US
  • Brent crude fell -0.1% ending the week at $43.3 a barrel
  • Gold rose 3.9% to end the week at an all-time high of $1975.9 an ounce

Global Matters Weekly – 27 July 2020

How flow can you go?
by Alex Harvey, CFA

After a bumper few months for equity markets, a recent report from Calastone, the global funds network, showed June was one of the worst months on record for outflows from UK equity funds. That follows positive UK market performance for each of April, May and June. The selling was broad based with even passive funds showing a rare negative flow print, so why the rush for the door and are investors cashing in their UK equity chips too early?

Market Snapshot

  • US-China tensions rise, EU members agree firm recovery path
  • Global Covid-19 cases top 15 million
  • Brent crude rose 0.5% ending the week at $43.3 a barrel
  • Gold rose 5.1% to $1902.0 an ounce as metals rallied

Global Matters Weekly – 20 July 2020

2020 – a rollercoaster ride
by James Klempster, CFA

How to sum up 2020 so far? A rollercoaster is probably the best way to describe it; both from an emotional perspective but also in terms of what the markets have been up to. Over the first quarter, market participants went from being blissfully ignorant to a state of panic as the significance of global lockdowns became apparent and investors were left wondering what the crisis would mean for the economy and companies; not to mention the humanitarian cost.

Market Snapshot

  • Cases of Covid-19 have reached 14 million globally with over 600k fatalities
  • The S&P 500 reached its highest intraday level since February
  • Brent crude fell -0.2% ending the week at $43.1 a barrel
  • Gold rose 0.7% to end the week at $1810.4 an ounce

Global Matters Weekly – 13 July 2020

Socially (Un)Acceptable
by Michael Clough

The inexorable growth of environmental, social and governance (ESG) awareness has been impossible to ignore. Social criteria can be difficult to measure and they don’t necessarily lend themselves to quantitative metrics that environmental and governance matters might. Whilst simple screens may highlight certain ESG risks at a company. Critics have said the coronavirus pandemic and resulting economic implications might push ESG discussions down the agenda once again with strong balance sheets and profits trumping attractive ESG scores. That certainly doesn’t look to be the case.

Market Snapshot

  • Cases of Covid-19 have reached 12 million globally
  • Key US technology benchmark reaches new all-time high
  • Brent crude rose 1.0% ending the week at $43.2 a barrel
  • Gold rose 1.5% to end the week at $1798.7 an ounce