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