- 31 dec.Vector 2021 Annual Review
- 15 okt.Q3 Review
- 17 aug.Chinese crackdowns
- 22 jul.Vector 2021 Semi-Annual Review
- 25 jun.Why we still like value
- 25 mei'Transitory' Inflation
- 22 apr.Reversal to the mean?
- 17 mrt.Vector's take on sustainable finance
- 09 mrt.Sustainability-related disclosures in the financial services sector (SFDR)
- 19 feb.David versus Goliath: An analysis of 2020 stock market performance
- 30 dec.Vector 2020 Annual Review
- 20 nov.Factor momentum
- 20 okt.How will the US elections influence your portfolio?
- 25 sep.Are better times for quant investing on the horizon?
- 26 aug.Fama/French going through its biggest drawdown since 1963
- 17 jul.Vector 2020 Semi-Annual Review
- 25 jun.A Look At Post-Corona Market Valuations
- 25 meiUnprecedented times call for unprecedented measures...
- 23 apr.Vector's outlook on the Corona Crisis
- 13 mrt.Market correction: sense or sentiment?
- 17 feb.The market and sector concentration
- 14 jan.Notice to shareholders
- 31 dec.Vector 2019 Annual Review
- 17 dec.Fama/French going through its second biggest drawdown since 1963
- 15 nov.The Alpha Lifecycle
- 16 okt.Vector 2019 Q3 Review
- 10 sep.A new prospectus
- 14 aug.Market Review: July
- 10 jul.Vector 2019 Semi-annual Review
- 14 jun.Are factor premia disappearing?
- 21 meiHow persistent is regional outperformance?
- 12 apr.Market recovery: sense or sentiment?
- 12 mrt.Markets solidify recovery
- 12 feb.Stock Markets Rebound
- 31 dec.Vector 2018 Annual Review
- 14 dec.2019 (outrageous) predictions!
- 20 aug.Temperatures and stock markets heat up
- 18 jul.Vector 2018 Semi-annual Review
- 14 jun.Do exporters suffer during trade wars?
- 15 meiStrong earnings put markets on the road to recovery
- 17 apr.Q1 Overview
- 13 mrt.Stock Markets: Episode VI: The return of volatility
- 02 mrt.Vector wins Morningstar Germany and Belgium Awards!
- 22 feb.Vector Flexible wins De Tijd/L'Echo Awards for the third year in a row!
- 16 feb.Navigator wins Morningstar France Award!
17 aug. 2021
Stock markets continued their drift upwards in July as restrictions on economic activity were further lifted throughout the developed world. There was a marked difference between the performance of the MSCI World (+1.8%) and All Countries (+0.7%) however as China’s reforms of its private education and real estate sector left their mark on emerging markets’ valuations.
On a value weighted basis Chinese stocks lost about 14% over the past month, doubling to tripling the losses of the equally weighted counterpart of the index or mainland China-based companies (A-shares). This indicates that the largest, most outside oriented corporations suffered most from China’s efforts to target certain long-term structural goals. While the basic materials sector was able to post some gains due to worldwide shortages, the tiny sector could do little to offset the onslaught in much bigger sectors that suffered recent crackdowns (i.e., tech, real estate/financials and consumer-oriented sectors).
While technology alone made up about a third of the MSCI China’s value weighted underperformance in July this is mainly due to dreadful returns of Tencent, Meituan and Baidu – three heavy weights within the index. The remainder of the sector had a decent month all things considered. This is a major difference with the Consumer discretion sector, where mega caps and small caps alike recorded significant losses.
The technology and consumer discretionary stocks we had in the portfolio also got hit pretty hard, but this was compensated by a larger relative allocation to sectors that were able to escape the thorn of China’s policymakers and some good individual stock picks that held up relatively well in July.
Overall, we are convinced that the long-term outlook for China remains positive, but remain cautious in building up portfolio positions as the short-term sentiment clearly remains erratic.
Werner, Thierry & Nils