Please find below our Investment Market Update as at 11th September 2020.
Blue Sky Investment Market Update
A tumble dryer
I think it’s fair to say that things are beginning to hot up ahead of the US Presidential election!
With less than two months to go we are seeing expected volatility across markets with news flow tumbling into negative sentiment on fears of a second wave of the virus.
Of course, there is plenty of good news but much of it has been smothered by anticipated uncertainties. To be frank, much of the news is like a tumble dryer, it’s the same old issues which come around and around but with the Presidential elections on the horizon, the temperature dial has been turned up.
Topsy turvy week for investment markets
In the US, shares dropped once again on signs that the recovery may be showing signs of petering out. There are also concerns over new financial support measures.
US stock markets have fallen this week in 4 out of 5 sessions.
I have written about technology stocks and their stellar recovery before, but a drop in the value of Tesla shares by 21% earlier in the week certainly spooked investors in the tech sector.
It happens with every election in some form or another, and with the US being the largest economic power in the world we shouldn’t be surprised any longer at the dirty tricks that are deployed from certain conflicting powers.
A Microsoft probe has found that Russian, Chinese and Iranian hackers have significantly increased their efforts to disrupt and influence the Presidential campaign.
Who’s going to reside in the White House?
It’s going to be a close-run thing. The stock market, up until this week was indicating it would be Trump, whilst the polls suggested it might be Biden. Now, they are neck and neck and who knows what might happen between now and November.
We all know that markets dislike uncertainty and it’s safe to say that this uncertainty has been exaggerated by the resurgence of Covid cases around the world.
US Bond issuances
The anticipation of a turbulent US Presidential election and fears over the possible disruption to financial markets has led to many companies taking advantage of cheap borrowing on favourable terms.
Companies are locking in lower borrowing costs for longer, and why not? Especially when the US Federal Reserve is buying up corporate debt as part of the rescue package. Already, 2020 has seen a record amount of debt sold by companies.
The Brexit shadow
I’ve largely steered away from mentioning the ‘B’ word over the last few months, but the shadow of Brexit is now descending upon us.
Apparently, the differences between the two entities are significant. The EU have reportedly given a three week ultimatum and have threatened legal action.
In some quarters it’s been suggested that the government are playing a dangerous game of brinkmanship. Others think a ‘no deal’ is the likely outcome in any event. There are lots of chapters still to come on this story!
Now for some good news
Having just re-read this script, I’m acutely aware it has a more negative thread than usual but, with US markets posting losses in 4 out of the last 5 sessions, explanation is required.
However, our portfolios aren’t orientated just towards the US and neither are they focused just on technology stocks! The portfolios have certainly proved to be more resilient than the US markets this week.
Selected performances are as follows:
LGTVestra Balanced = 0.42%
LGTVestra Sustainable growth = 0.54%
Sapphire balanced = 0.62%
Momentum = 0.86%
All figures are after fund and platform charges.
Citywire top of the pops
As you know, we really like infrastructure and we really like the investment company, Foresight, as well.
Well, neither disappointed as Citywire ranked Foresight’s Global Real Infrastructure fund as 1st out of 24 funds in its sector. This was for delivering 11.3% out performance compared to the 2nd price fund. Outstanding!
More information is available here.
Global Real Infrastructure Portfolio Update
Recently, they’ve seen particular strength in two of their European based renewable energy companies who achieved all-time high share prices in August – showing the continued attractiveness of renewable energy assets to investors.
Scatec Solar is a Norwegian owner of solar assets, with their assets located in developing economies. The company have continued to enact their growth strategy which has gained increasing support from investors, pushing the share price to an all-time high of 190.4 kr.
Encavis is a German owner of solar and winds assets. The company reached an all-time high of €15.76, representing a 1-year total return of circa 80%.
I told you there was some good news!
Have a lovely weekend
Gary and the Investment Team
Please Note: This communication should not be read as giving specific advice regarding your personal circumstances. This would only be given following detailed assessment of your individual needs. The value of investments may fall as well as rise; you may get back less than invested. Past performance is not necessarily a guide to future returns.