Markets solidify recovery

12 mrt 2019

Dear investors,

The global equity markets added another excellent month to the recovery that started near the end of Q4 2018. Markets, which increased 3.5% over the course of February, are now up about 16% from their December lows and inching ever closer towards new highs. Investor sentiment was clearly was helped by the US-China trade talks and Chinese stimulus.

Due to favourable developments in US-China trade conflict the increase in tariffs, which was scheduled to come into effect on the first of March, was delayed. Evidently, this news had a positive impact on market valuations. Mainly export-heavy companies profited from a further de-escalation of the trade conflict. In fact, ever since the US and China reopened dialogue in early November US companies that earn a significant part of their revenues overseas have outperformed domestic sellers by approximately 10%. Below you can find an updated version of the graph and timeline that we presented in an earlier newsletter.

Chinese stimulus, aimed to combat the negative effect of the tariff war on its trade sector, further helped investor sentiment. Yet, challenges for emerging markets still persist as many of these developing economies have shown weak macroeconomic figures in recent months.

Vector Navigator recorded a performance of 3.48% in February, which is pretty much identical to the benchmark index’s result during the month. Flexible added 1.34% to its year-to-date result, which now stands at 6.19%. After the strong recovery the markets have had in recent weeks, we increased our cash position in both funds and decided to increase the hedge in Vector Flexible from 44% to 51%.

Best regards,

Werner, Thierry and Nils