14 February 2020
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Welcome to our weekly newsletter, where the Manager summarises the key market developments over the last seven days.

The Noise

The World Health Organisation has named the Coronavirus outbreak COVID-19 as the virus continues to escalate. The number of deaths has now reached 1,367 which is more than double the number reported this time last week. The ninth case in the UK has been confirmed this week as the NHS continues efforts to contain the virus.

Figures released by the Office for National Statistics (ONS) this week reveal zero growth in the final three months of 2019 as the manufacturing and services sectors slowed down in the run-up to the December election. However, on a more positive note, the ONS figures also showed that the economy grew by 1.40%, overall, in 2019 to be the third-fastest growing economy in the G7 group of advanced nations.

UK Chancellor Sajid Javid has resigned, as Prime Minister Boris Johnson carries out a postBrexit cabinet reshuffle. His resignation was in response to an order to fire his team of aides, saying “no self-respecting minister” could accept such a condition. His replacement will be Rishi Sunak, the current Chief Secretary to the Treasury.

The Numbers

GBP Performance to 13/02/20
1 Week
YTD
Absolute Level
Equity GBP Total Return (MSCI)

UK (MSCI UK)

-0.50%

-1.00%

6690

Europe (MSCI Europe)

-0.90%

1.70%

7182

US (MSCI USA)

0.00%

6.60%

9142

Japan (MSCI Japan)

-2.00%

0.70%

6757

Emerging Markets (MSCI Emerging)

-0.60%

0.80%

524

Fixed Income GBP Total Return

UK Government (Barclays Sterling Gilts Index)

-0.20%

2.70%

300

Investment Grade Hedged (Barclays Global Aggregate Corporate Bond Index)

0.20%

1.90%

309

High Yield Bonds Hedged (Barclays Global High Yield Index)

0.20%

1.10%

536

GBP Performance to 13/02/20
1 Week
YTD
Absolute Level
Currency Moves

GBP vs USD

0.90%

-1.60%

1.30

GBP vs EUR

2.20%

1.80%

1.28

GBP vs JPY

0.80%

-0.50%

143

Commodities GBP Return

Gold (in £)

-0.30%

5.60%

1207

Oil (in $)

0.00%

-14.00%

52

Source: Bloomberg, data as at 13/02/20

The Nuance

Once again, Coronavirus has dominated headlines this week. Experts warn that the outbreak could wipe more than £200bn from worldwide output, causing growth to come to a near standstill in the first quarter of 2020. Markets were down this week as investors start to price in the effects of economic inactivity from businesses and homes in Asia. The Manager’s approach remains diligent as it strives to keep a level head and pursues quality assets which are better able to weather these stormy market conditions.

The investment philosophy of the Manager, to focus on resilient companies with strong cash-flows and healthy balance sheets, is particularly useful in times of economic hardship. These assets tend to outperform relative to the rest of the market because they are better equipped to cope with the unexpected. The Manager is actively monitoring the situation and, while it constantly guards against complacency, its ongoing analysis gives the Manager confidence in its current holdings even as markets continue to fluctuate.

Quote of the week

“In recent weeks dentists have been hit by panic buying, clumsy rationing and naked profiteering.”

British Dental Association Chairman, Nick Armstrong

The Coronavirus has had tragic consequences around the globe, but there are some rather less obvious ramifications from the widespread panic. As the virus continues to spread, citizens globally are taking conscious steps to avoid contamination. One such effort includes the purchase of sanitary facial masks, and the mass purchasing is having knock-on effects. The British Dental Association (BDA) says it has been inundated with calls from member practices as the industry struggles to get its hands on the masks. In England, dentists are required to wear the disposable face masks; the BDA Chair says that unless there is a rapid increase in supply, many dentists without face masks will have little choice but to put down their drills.

Source: Sanlam Private Wealth

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Sanlam Private Wealth is a trading name of Sanlam Private Investments (UK) Ltd.

Past performance is not a reliable indicator of future returns, investing involves risk and the value of investments, and the income from them, may fall as well as rise and are not guaranteed. Investors may not get back the original amount invested.

The information and opinion contained in this market view should not be treated as a forecast, research or advice to buy or sell any particular investment or to adopt any investment strategy. Any views expressed are based on information received from a variety of sources which we believe to be reliable, but are not guaranteed as to accuracy or completeness by Sanlam. Any expressions of opinion are subject to change without notice.

Disclaimer: VAM Cautious, Balanced and Growth Funds are compartments of VAM Managed Funds (Lux).
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