Imperium Capital Publication

Global Matters Weekly – 27 April 2020

COVID-catalysed structural changes in global real estate?
by David Lashbrook CA (SA), CFA

As a landlord and investor in real estate, I am closely watching how the world adapts to the global lock down. In our case at Momentum Global Investment Management, the transition from office to homebound working has been seamless. I wonder if this is going to cause a structural change in the demand for office space over the medium term as companies renew their current lease commitments and review their ongoing office accommodation requirements.

Market Snapshot

  • Weak earnings and oil market chaos hit equities
  • April flash PMIs point to crippling impact of the pandemic
  • Brent crude fell 23.6% ending the week at $21.4 a barrel
  • Gold rose 2.8% ending the week at $1729.6 an ounce

Global Matters Weekly – 20 April 2020

Drop the top
by Richard Stutley, CFA

A lot has changed and at the same time many aspects of our lives and work go on much as before. We met last week for our regular round of asset allocation meetings just like we always do, only this time via video link rather than all sat around the desk. One area that looks interesting to us currently is convertible bonds, which in many cases are trading cheap relative to their component parts: the straight bond and the equity option. While convertible cars, or drop-tops, tend to dominate the drawdown phase of most people’s lives, convertible bonds have something to offer in the earlier accumulation phase.

Market Snapshot

  • The global number of coronavirus cases surpassed 2 million last week
  • China printed a 6.8% first quarter fall in their year-on-year GDP growth
  • Brent crude fell by 10.8%, ending the week at $28.1 a barrel
  • Gold fell 0.8% ending the week at $1682.8 an ounce

Viewpoint – April 2020

Three months ago, investors were looking forward to an improved year of global growth and corporate earnings. That was then. The coronavirus crisis is an era defining event; life before coronavirus and life afterwards. Above all it is a humanitarian crisis on an epic scale, the speed of its destruction amply illustrated by its spread: on February 29th there were 85,000 confirmed cases across 58 countries, with 2,924 deaths, by 6th April there were 1.25m cases and over 69,000 deaths as the pandemic reached 207 countries.

Global Matters Weekly – 6 April 2020

Some things never change
by Michael Clough

In many ways, life has changed so much in recent weeks. Our usual routines suddenly seem distant memories. In other ways though, some practices haven’t changed at all. The ongoing management of our portfolios and two key components which underpin this, asset allocation and manager research, have continued uninterrupted. Of course, the way we carry them out has changed.

Market Snapshot

  • Global equities reverse some of the previous week’s gains, but relatively contained
  • Global employment numbers and service sector PMIs plummet
  • Brent crude surged 36.8%, ending the week at $34.1 a barrel
  • Gold fell 0.5% ending the week at $1620.8 an ounce

Global Matters Weekly – 30 March 2020

China’s recovery
by Stephen Nguyen, CFA

We are living in unprecedented times, with much of the world under lockdown due to COVID-19. There are a multitude of potential outcomes resulting from the increasingly extreme global measures being taken to prevent its spread and of course many unanswered questions regarding the lockdown exit strategy or how it all ends. While we are yet to change our portfolios allocations materially, we are making evolutionary changes to the underlying holdings to emphasise balance sheet strength. It doesn’t presently seem appropriate to add significantly to portfolio risk: we stick to our unwavering belief that a well-constructed diversified portfolio is the most efficient way to achieve longer term outcomes. Nevertheless, it is instructive to sketch positive scenarios into our outlook and where better to look for inspiration for a positive spin on events than China, which was the first country to go into full lockdown at the end of January. What can we learn and more importantly what can we expect?.

Market Snapshot

  • US equities rebounded by record amounts early in the week
  • The US agreed upon a $2.2 trillion fiscal stimulus package late Tuesday
  • Brent crude fell 7.6%, ending the week at $24.9 a barrel
  • Gold rose 8.6% ending the week at $1628.2 an ounce