24 November 2019
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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 US Senate has unanimously passed a bill this week in support of pro-democracy activists in Hong Kong. The bill lays out a process for the President to impose sanctions and travel restrictions on those seen to be arbitrarily punishing activists in Hong Kong, and creates a requirement for an annual review of the special treatment Hong Kong receives under US law. The move has unsettled markets slightly over concerns that it may destabilise the international trade discussions.

The Pound has gained ground against the Dollar and hit a six-month high against the Euro this week, as opinion polls point to a conservative majority in the December general election. Analysts are forecasting sizeable swings in the currency depending on the election outcome.

Saudi Aramco has hired no less than 25 banks to work on its upcoming IPO, which is set to become one of the biggest listings in history. According to the price range set by the oil giant on Sunday, it could be worth up to $1.7 trillion.

The Numbers

GBP Performance to 21/11/19
1 Week
YTD
Absolute Level
Equity GBP Total Return (MSCI)

UK (MSCI UK)

-0.40%

11.90%

6424

Europe (MSCI Europe)

-0.10%

16.70%

6852

US (MSCI USA)

0.20%

24.10%

8366

Japan (MSCI Japan)

0.00%

16.00%

6691

Emerging Markets (MSCI Emerging)

0.00%

9.30%

493

Fixed Income GBP Total Return

UK Government (Barclays Sterling Gilts Index)

-0.80%

7.40%

293

Investment Grade Hedged (Barclays Global Aggregate Corporate Bond Index)

0.00%

10.10%

301

High Yield Bonds Hedged (Barclays Global High Yield Index)

-0.30%

8.40%

517

GBP Performance to 21/11/19
1 Week
YTD
Absolute Level
Currency Moves

GBP vs USD

0.20%

1.30%

1.29

GBP vs EUR

-0.10%

5.00%

1.17

GBP vs JPY

0.40%

0.30%

140

Commodities GBP Return

Gold (in £)

-0.70%

12.80%

1142

Oil (in $)

2.80%

19.30%

58

Source: Bloomberg, data as at 21/11/19

The Nuance

If Saudi Aramco reaches the top end of its expected market value, it will beat Chinese e-commerce giant Alibaba’s record as having the largest stock market debut in history, and will join the throng of companies that jostle for the spot as biggest listed company in the world.

The oil giant only plans to sell 1.5% of the company (around 3 billion shares) on the kingdom of Saudi Arabia’s stock exchange, and initial plans to sell a larger proportion on multiple stock exchanges around the world have been scaled back. It will be interesting to see what investor demand for shares in the company actually looks like; on the one hand, the increased investor focus on Environmental, Social and Governance (ESG) characteristics of companies naturally places fossil fuel firms at a disadvantage, and from a long-term investor’s perspective, it’s hard to ignore the geopolitical risks and the fact that oil prices are likely to come under pressure from global measures to cut greenhouse gas emissions. On the other hand, it is the most profitable company in the world. The company currently plans to pay a dividend of $75 billion next year, more than five times larger than that of Apple. In a world starved of yield that might well be enough to whet investor appetite for crude oil.

Quote of the week

“If you have 271 works by Picasso and you want to put them on the international market, you need a certificate of authenticity”

JeanJacques Neuer, lawyer to the Picasso family.

A decade-long saga came to a close this week, as French courts decided to uphold a decision to deliver a suspended jailed sentence to Pablo Picasso’s electrician, for hoarding 271 of the artist’s works in his garage. The works – including drawings, lithographs and extremely rare Cubist collages - had been stashed in over a dozen bin bags and held by Pierre and Danielle Le Guennec since the 1970s, claiming initially that the works were a “gift” from the artist for his service.

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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