07 August 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

Russian President Vladimir Putin has said that a locally developed vaccine for Covid-19 has been given regulatory approval after less than two months of testing on humans. Experts were quick to raise concerns about the speed of Russia’s work, and a growing list of countries have expressed scepticism. Personally, the Manager won’t be lining up for a jab just yet

This week, Democrat Presidential candidate Joe Biden announced that Kamala Harris would be his running mate for the upcoming election. Success for Biden would make her the first non-white woman to be nominated for national office by a major political party. Success would also mean that Biden would be 81 years old at the end of his first term and 85 at the end of his second if he were re-elected. Harris has to think herself in with a shot at bagging the top job.

Annual US Consumer Price Inflation (CPI) rose to 1.60% in July versus the consensus estimate of 1.10%. The move resulted in a slight rise in bond yields as fixed income investors demand a higher return from holding the assets given that the future cash streams paid out from owning the bonds will be worth less in real terms.

The Numbers

GBP Performance to 13/08/20
1 Week
YTD
Absolute Level
Equity GBP Total Return (MSCI)

UK (MSCI UK)

3.20%

-17.20%

5609

Europe (MSCI Europe)

3.50%

-3.80%

6812

US (MSCI USA)

1.30%

8.00%

9281

Japan (MSCI Japan)

4.00%

-0.70%

6672

Emerging Markets (MSCI Emerging)

-0.30%

1.30%

527

Fixed Income GBP Total Return

UK Government (Barclays Sterling Gilts Index)

-2.10%

7.70%

315

Investment Grade Hedged (Barclays Global Aggregate Corporate Bond Index)

-0.90%

4.80%

317

High Yield Bonds Hedged (Barclays Global High Yield Index)

0.30%

-1.10%

524

GBP Performance to 13/08/20
1 Week
YTD
Absolute Level
Currency Moves

GBP vs USD

-0.60%

-1.40%

1.31

GBP vs EUR

-0.10%

-6.50%

1.11

GBP vs JPY

0.70%

-3.00%

139

Commodities GBP Return

Gold (in £)

-4.80%

30.60%

1489

Oil (in $)

1.30%

-25.90%

42

Source: Bloomberg, data as at 13/08/2020

The Nuance

Last week, the Manager extolled the virtues of patience for long-term investors. Since then, it’s been satisfying to see this pay off in its portfolios. As the final dribs and drabs of companies report on their earnings, it’s been encouraging to see some of the Manager’s core holdings announcing positive news.

Rightmove saw product sales to estate agencies up 7% year-on-year and web traffic up 50% in June. The share price rose 11% on the day in response to positive financial news and strong demand for the company’s product. Whilst it’s not time to pop the champagne corks, it’s encouraging to see the share price reacting so positively to constructive data.

Intercontinental Hotels Group’s cash position was almost unchanged from the end of 2019 despite the tough period, leaving them extremely well positioned to start generating cash flow as hotel capacities climb back towards pre-crisis levels.

Tencent posted another impressive set of quarterly results: the company beat its bottom line estimates by over 20% with a strong pipeline of new games to be released and a portfolio of investments in other companies bearing fruit. Whilst the Manager has been trimming the position on valuation grounds leading into the results, the growth potential for this business remains attractive. The Manager is of course long-term investors and although these are all short-term successes, they are reward for its analysts’ diligent research; the Manager is comforted that results are translating into material share price appreciation.

Quote of the week

“Because my hair – I don’t know about you, but it has to be perfect. Perfect.”

Donald Trump, US President.

Trump has been the culprit of quite a few Quotes of the Week over the last month – with good reason. In the latest bizarre turn of events, Trump has corralled the US government into changing the definition of a showerhead to allow increased water flow so that he can improve his haircare routine. Only Trump could possibly think that the solution to a bad hair day is to introduce a new law. In a way, you have to admire his tenacity.

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).
This document is intended for use by professional financial advisers only. The distribution of VAM Funds and the offering of the shares may be restricted in certain jurisdictions. Private investors should contact their financial adviser for more details on any of the products featured. It is the responsibility of any person in possession of this document to inform themselves of, and to observe, all applicable laws and regulations of any relevant jurisdictions. Prospective applicants for shares should inform themselves as to the legal requirements and consequences of applying for, holding and disposing of shares and any applicable exchange control regulations and taxes in the countries of their respective citizenship, residence or domicile.


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