19 June 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

A new Coronavirus outbreak in Beijing has worried markets this week as the number of cases in the new cluster reaches 158 as of Thursday morning. This outbreak is despite the continuation of the ban on foreign travel to China and extensive contact tracing measures. After two months of loosening measures, the city has reimposed strict measures to prevent a second wave of infections, returning to the same restrictions which were in place back in February

The Bank of England announced on Thursday that it will pump an extra £100bn into the UK economy to help fight the Coronavirus-induced downturn. This additional commitment measure brings the 2020 quantitative easing total to £745bn, far surpassing the £200bn worth of government bonds purchased by the Bank in the wake of the 2008 crisis.

The US Federal Reserve kicked off a long-awaited programme to buy corporate bonds on Tuesday, more than two months after it was unveiled. The Fed had already begun indirectly buying corporate bonds in the form of ETFs (Exchange Traded Funds, which are financial instruments containing large quantities of assets – in this case, bonds) but was yet to step in and purchase bonds directly.

The Numbers

GBP Performance to 18/06/20
1 Week
Absolute Level
Equity GBP Total Return (MSCI)





Europe (MSCI Europe)








Japan (MSCI Japan)




Emerging Markets (MSCI Emerging)




Fixed Income GBP Total Return

UK Government (Barclays Sterling Gilts Index)




Investment Grade Hedged (Barclays Global Aggregate Corporate Bond Index)




High Yield Bonds Hedged (Barclays Global High Yield Index)




GBP Performance to 18/06/20
1 Week
Absolute Level
Currency Moves













Commodities GBP Return

Gold (in £)




Oil (in $)




Source: Bloomberg, data as at 18/06/2020

The Nuance

Despite the assortment of red and green year-to-date numbers in the table above, it’s still clear that markets have bounced back very strongly from their oversold positions in mid-March.

Now is the time to be patient. As an investor, it can feel counter-intuitive to watch the situation unfold and allow the market to evolve even as you keep a careful eye on your holdings. However, trading for the sake of it is a guaranteed way to make mistakes and give up profitable positions.

Strong push and pull factors are at play in the macroeconomic backdrop, with fiscal and monetary stimulus pushing up investor confidence whilst the risk of a second wave of infections threatens to pull market sentiment back down. Given the significant bounce back since March, it’s natural for markets to take a pause for the time being; even a small correction would be unsurprising at this point as market participants wait for events to play out.

Approaching the end of the second quarter, it will be some time before companies once more update the market on business conditions, thus, creating a news vacuum. Markets can be volatile in such an environment, pushed around by the ebbs and flows of sentiment, and investors would be wise to remember that it is the passage of time and compounding that generate the vast bulk of returns, not short-term trading tactics.

The Manager continues to monitor all its holdings while also devoting time to evaluating businesses that it doesn’t currently own to see if any can earn their way into the portfolio. In this sense, a great deal of work is required to do nothing other than to prepare itself for potential future decisions.

Quote of the week

“I’ve got to say on this ‘taking the knee’ thing … it seems to be taken from the Game of Thrones.”

Dominic Raab, UK Foreign Secretary.

Dominic Raab has been ridiculed for claiming that “taking a knee” was a symbol of subjugation originating from the fantasy TV drama Game of Thrones. Taking the knee began in 2016 with American athletes refusing to stand for the US national anthem in a protest against police brutality and racism. In Game of Thrones, “bending the knee” is a formal act of submission to a monarch or lord, so it’s probably fair to say: not quite the same idea. Asked if he would take the knee, Mr Raab replied: “I take the knee for two people: the Queen and the missus when I asked her to marry me.”

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.

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