Imperium Capital Publication

Global Matters Weekly – 23 November 2020

Road to Recovery

by Andrew Hardy, CFA
Following a third consecutive Monday of hugely encouraging news in the fight against COVID-19, global equities are well on track to delivering their best one month return in over a decade, up 11% and counting. Vaccine developments have propelled economically sensitive sectors such as energy, financials and industrials higher in November – with tech stocks in the slow lane for a change – resulting in one of the most rapid shifts in market leadership ever seen in markets. The recovery potential in ‘value’ stocks remains massive in our opinion, particularly in the areas hardest hit by the pandemic, but investors don’t necessarily have to take on high levels of risk or sacrifice quality in their portfolios, in order to access this opportunity. The infrastructure sector is a prime example of an area that we believe has plenty of open road ahead.

Market Snapshot

  • Global equity markets returned +0.4% last week
  • The Oxford/AstraZeneca vaccine is shown to prevent 70% of Covid cases in clinical trials. This follows last week’s announcement from Moderna of 94.5% efficacy in phase 3 trials
  • Brent crude rose +5.1% to $44.96 a barrel
  • Gold fell by -1.0% to $1870.99 per ounce

Global Matters Weekly – 16 November 2020

Light at the end of the tunnel

by Christopher Butcher
News last week of a potentially highly effective vaccine against Covid-19 has raised hopes that there is an end in sight to what has been an extremely challenging time for countries around the world. The virus has claimed the lives of 1.25 million people and paralysed the world economy. The Pfizer and BioNTech finding was the result of the first independent analysis of any Covid-19 vaccine in phase 3 trials – the final stage before commercial licensing – and it was found to be 90% effective, a level well above expectations. To put this into context, the widely-used measles vaccine is 97% effective and the season flu vaccination is between 40% and 60% effective. This is an important milestone on our path towards potentially ending this pandemic and the developers of the vaccine described it is a “great day for science and humanity”.

Market Snapshot

  • Global equities rose 2.4% last week on the back of positive vaccine news, which sparked a rotation from ‘stay at home’ tech stocks to cyclicals
  • The Pfizer and BioNTech vaccine has shown to be over 90% effective in preventing infections of Covid-19 from its efficacy data release
  • Brent crude rose 8.4% ending the week at $42.8 a barrel
  • Gold fell -3.2% to end the week at $1889.2 an ounce

Global Matters Weekly – 9 November 2020

Cheque List

by Michael Clough
Over the weekend we had confirmation that Joe Biden has won the race to become the next President of the United States of America. Despite Trump claiming election fraud, vowing legal action and thus refusing to concede, Biden is set to take up residence in the White House. One of the main talking points in the run up to this election was around a second stimulus package to help sustain the US economic recovery after a record 31% (annualised) collapse in GDP in Q2. Prior to the election discussions had reached an impasse, putting even greater importance on the composition of US Congress – including the House of Representatives and the Senate – which, at least for this issue, is arguably more important than who actually sits in the White House.

Market Snapshot

  • The major global equity index returned +7.7% last week as all regions rallied.
  • Joe Biden is on-track to become the 46th president of the US despite expected legal contestation from the Trump administration.
  • Brent crude rose 5.3% to $39.5 a barrel.
  • Gold rose 3.9% to $1951.4 per ounce

Global Matters Weekly – 2 November 2020

Inflated expectations?
by Stephen Nguyen, CFA

It has been one of the main discussion points of the past three years, five years and even decades in the case of Japan: will inflation return? Low prices and ultra-low rates must surely end at some point; or maybe not… We are amid a pandemic and going through a period of depressed economic activity, so why would inflation even register on investors’ radars? As an asset allocator, it is imperative we consider what might happen to inflation and inflation expectations in the coming years in order to effectively build robust portfolios for our clients.

Market Snapshot

  • Global equities fell -5.6% on the week as the number of Covid-19 cases surged in Europe and the US
  • The US economy expanded at a record 33.1% annualised rate in Q3, which beat market expectations
  • Brent crude fell -10.3% ending the week at $37.5 a barrel
  • Gold fell -1.2% to end the week at $1878.8 an ounce