Equity Market Review · 5/26/2020 · Weekly Recap Market Review Global Markets rebounded sharply...
20
Transcript of Equity Market Review · 5/26/2020 · Weekly Recap Market Review Global Markets rebounded sharply...
Equity Highlights
May 26, 2020 2
Performance
ScheduleImportant Events This Week
Thursday: US Durable Goods Orders, US GDP, US Jobless
Claims, US Crude Oil inventories
Friday: US Wholesale Inventories
Monday: China Caixin, US ISM Manufacturing
Total return performance on both the portfolios and the indices – As of Friday evening
Strategy European Global Leaders
US Global Leaders
Next-Gen Leaders
YtD -19.38% vs -21.25% / 1.87% alpha YtD -8.18% vs -7.77% / -0.41% alpha
Weekly 3.79% vs 5.03% / -1.25% alpha Weekly 3.08% vs 3.27% / -0.19% alpha
2019 32.10% vs 29.34% / 2.76% alpha 2019 35.66% vs 31.49% / 4.17% alpha
2018 -6.90% vs -11.26% / 4.36% alpha 2018 1.48% vs -4.39% / 5.86% alpha
Since Inception 124.70% vs 75.52% / 49.18% alpha Since Inception 248.82% vs 190.97% / 57.86% alpha
Since August 2011 Benchmark: EuroStoxx 50 Since August 2011 Benchmark: S&P 500
YtD -9.80% vs -13.06% / 3.27% alpha YtD 6.71% vs 8.25% / -1.54% alpha
Weekly 0.58% vs 1.65% / -1.08% alpha Weekly 5.63% vs 2.90% / 2.73% alpha
2019 31.59% vs 18.10% / 13.49% alpha 2019 33.55% vs 39.46% / -5.91% alpha
2018 -12.99% vs -16.04% / 3.05% alpha 2018 6.92% vs 0.01% / 6.91% alpha
Since Inception 18.00% vs -2.17% / 20.17% alpha Since Inception 74.72% vs 65.05% / 9.66% alpha
Since August 2017 Benchmark: Topix Since July 2017 Benchmark: Nasdaq
European Global Leaders US Global Leaders
Japanese Global Leaders Next-Gen Leaders
Digital Transformation in the age of COVID-19
A number of high profile CEO in the digital world have
expressed a marked optimism regarding the impact of the
COVID crisis on digital transformation.
“Microsoft has seen two years' worth of digital transformation in
just two months” - Satya Nadella, CEO of Microsoft
“The world will likely be in a state of transition over the next 12
to 18 months due to the COVID-19 pandemic. We believe this
will prompt key trends to accelerate, including remote working
models, shift to the cloud, and focus on AI/ML and automation
to drive effective cybersecurity outcomes” - Nikesh Arora, CEO
of Palo Alto Networks
“Our online demand has gone through the roof” - Doug Merritt,
CEO of Splunk
“Digital Payment Services have seen a "tremendous surge" in
demand” – Dan Schulman, CEO of PayPal
“Digital transformation was a business imperative pre-COVID
with $7.4 trillion of projected spend over the next three years.
Post-COVID, digital transformation will accelerate, and
ServiceNow is the workflow standard for digital transformation.”
Bill McDermott – CEO of ServiceNow
May 26, 2020 3
Performance since February 19
Name TickerExch
CodeTheme Perf
Coupa Software COUP US Productivity 31%
Take-Two Interactive TTWO US Media 24%
Paypal PYPL US FinTech 22%
Zalando ZAL GY E-Commerce 20%
Activision Blizzard ATVI US Media 14%
Amazon AMZN US e-Commerce 12%
Match Group MTCH US Media 12%
Electronic Arts EA US Media 9%
Servicenow NOW US Productivity 8%
Facebook FB US Internet Media 8%
Splunk SPLK US Knowledge 6%
Adobe ADBE US Productivity 1%
Apple AAPL US Hardware -1%
Microsoft MSFT US Software -2%
Ubisoft UBI FP Media -3%
Palo Alto Network PANW US CyberSecurity -4%
Square SQ US FinTech -4%
Performance of a few of our favorite digitalization plays during the crisis
Digital Transformation in the age of COVID-19
Many stocks of these stocks have reached a high level and are difficult to chase at these
prices.
Our Next-Gen Leaders fund offer a tailor made product to benefit from transformative
trends with an active management of the risk exposure.
May 26, 2020 4
20%
25%
30%
35%
40%
45%
50%
55%
60%
80
85
90
95
100
105
110
115
28-Feb-20 6-Mar-20 13-Mar-20 20-Mar-20 27-Mar-20 3-Apr-20 10-Apr-20 17-Apr-20 24-Apr-20 1-May-20 8-May-20 15-May-20
Next-Gen Leader NAV (lhs)
Net Equity Exposure (rhs)
Weekly Recap
May 26, 2020 5
Weekly Recap
Market Review
Global Markets rebounded sharply (EuroStoxx 50 +4.9%, S&P 500 +3.2%) as investors welcomed positive
results from the first US Covid-19 vaccine trial and the easing of lockdowns in many major economies.
The top US economic policy leaders offered contrasting outlooks at a congressional hearing, with Mnuchin
favoring a wait-and-see approach to more federal aid and Powell suggesting more would be needed.
Another wave of Americans applied for unemployment benefits last week, extending a swift and severe
deterioration in the labor market and more than 38M Americans have filed applications since mid-March.
Germany and France have joined forces to push for a €500bn EU recovery fund, boosting the effort to
create a coordinated European fiscal response to the coronavirus pandemic.
Asian Equities were down as Trump escalated his rhetoric against China and the outlook for China’s
economy deteriorated, as concerns over the impact of the crisis on global trade outweighed the prospect of
fresh support from central banks.
May 26, 2020 6
European Global Leaders – Weekly Recap
Equity Top News
The strategy had a strong positive performance but underperformed its benchmark.
AstraZeneca said it can produce 1Bn doses of Oxford’s potential COVID-19 vaccine and received a $1Bn
support from the US Biomedical Advanced Research and Development Authority. But company also said
this will not have any significant impact on 2020 revenues.
Vinci rose after the VINCI Construction Grands Projects joint venture has been awarded a €799M contract
by Société du Grand Paris for the construction of package 1 of Grand Paris Express Line 18.
Fresenius jumped strongly after an upgrade to overweight from Morgan Stanley, as it sees that
reimbursements procedures more likely delayed than cancelled and then concerns around its hospital
business could be overdone.
May 26, 2020 7
US Global Leaders – Weekly Recap
Equity Top News
The strategy had a strong positive performance but slightly underperformed its benchmark.
Facebook is launching Shops, a service that puts it in direct competition with Amazon and eBay. It will allow
businesses to display and sell products to its 2.6bn users, allow sellers to create digital storefronts on
Facebook or Instagram, adding that it would benefit by gathering valuable data on what shoppers want.
Amazon is getting ready to return to pre-pandemic operations, including scheduling its annual Prime Dayshopping promotion for the fall and allowing unlimited shipments of nonessential goods to warehouses.
Honeywell launched an integrated set of solutions to help building owners operate more cleanly and safely,
to help minimize potential risks of contamination by monitoring the building environment and comply with
social distancing policies. It also profited as it was raised to buy from hold by HSBC.
Johnson & Johnson, besieged by lawsuits, will stop selling baby powder made with talc in the US and
Canada, citing a decline in customer demand amid safety concerns about one of its most famous products.
Bristol-Myers suffered from the fall of US sales of cancer immunotherapy drugs in April.
May 26, 2020 8
Next-Gen Leaders – Weekly Recap
Equity Top News
The strategy was strongly positive and benefited from the high beta of its components.
Splunk rose despite soft quarterly results as CEO said that cloud business is “going through the roof”. The
earning miss was mostly due to accounting differences in the treatment of cloud products.
Palo Alto surge after quarterly earnings and guidance topped estimates amid strong demand for its security
product for network cloud access. CEO said COVID-19 will prompt key trends to accelerate, including
remote working models, shift to the cloud, and focus on automation.
Take-Two’s earnings beat estimates amid a surge in gaming activity related to Covid-19 stay-at-home
orders. Company warned that the current boom in video-game play may fade after lockdowns end.
May 26, 2020 9
Conviction Portfolios
European Global Leaders
US Global Leaders
Japan Global Leaders
Next-Gen Leaders
May 26, 2020 10
European Global Leaders
May 26, 2020 11
Total Return performance on both the portfolio and the index. The full list of constituents is available on our website.
-20
0
20
40
60
80
100
120
140
160
180
200
220
European Global Leaders EuroStoxx 50 Total Return
European GL EuroStoxx 50 Delta
Weekly Performance 3.79% 5.03% -1.25%
YtD Performance -19.38% -21.25% 1.87%
1Y Volatility 26.2% 28.8% -2.6%
Perf.since inception 122.8% 75.2% 47.6%
Annualized Perf. 13.7% 9.4% 4.3%
2019 32.1% 29.3% 2.8%
2018 -6.9% -11.3% 4.4%
Volatility 16.2% 20.5% -4.3%
Max Draw Down -36.1% -38.2% 2.1%
Inception Date 31 Aug 2011
European Global Leaders
May 26, 2020 12
Weights within the portfolio are comprised between 2% and 5%
Name TickerExch
CodeTheme Sector
Mkt Cap
($bn)Country
Nestlé NESN SW Food Products Consumer Staples 316.9 Switzerland
Roche ROG SW Pharmaceuticals Health Care 308.7 Switzerland
Novartis NOVN SW Pharmaceuticals Health Care 227.1 Switzerland
LVMH MC FP Luxury Goods Consumer Discretionary 190.2 France
Novo Nordisk NOVOB DC Pharmaceuticals Health Care 156.2 Denmark
L'Oréal OR FP Household Products Consumer Staples 147.9 France
SAP SAP GY Software Information Technology 143.5 Germany
Astrazeneca AZN LN Pharmaceuticals Health Care 134.8 Britain
RDSA (EUR) RDSA NA Big Oil Energy 132.0 Netherlands
Unilever NV UNA NA Food and Household Products Consumer Staples 131.7 Britain
ASML ASML NA Semiconductors Equipment Information Technology 125.2 Netherlands
Total FP FP Big Oil Energy 89.0 France
Inditex ITX SM Apparel Consumer Discretionary 80.0 Spain
Allianz ALV GY Diversified Insurance Financials 72.1 Germany
Volkswagen VOW3 GY Automobiles Consumer Discretionary 69.2 Germany
Kering KER FP Luxury Goods Consumer Discretionary 62.8 France
Schneider Electric SU FP Energy Management Industrials 51.6 France
Essilor EL FP Medical Devices Consumer Discretionary 51.1 France
Heineken HEIA NA Brewers Consumer Staples 48.2 Netherlands
Vinci DG FP Infrastructure Industrials 47.4 France
Dassault Systemes DSY FP Software Information Technology 40.0 France
Philips PHIA NA Health Care Health Care 39.2 Netherlands
AXA CS FP Diversified Insurance Financials 39.1 France
BNP BNP FP Banks Financials 36.9 France
Banco Santander SAN SM Banks Financials 34.7 Spain
Ferrari RACE IM Luxury Goods Consumer Discretionary 29.4 Italy
Intesanpaolo ISP IM Banks Financials 26.1 Italy
Vivendi VIV FP Media Communication Services 25.3 France
Fresenius FRE GY Diversified Health Care Health Care 23.3 Germany
Thales HO FP Defense Industrials 16.0 France
Ubisoft UBI FP Video Games Communication Services 9.2 France
US Global Leaders
May 26, 2020 13
Total Return performance on both the portfolio and the index. The full list of constituents is available on our website.
-20
0
20
40
60
80
100
120
140
160
180
200
220
240
260
280
300
US Global Leaders S&P 500 Total Return
US GL S&P 500 Delta
Weekly Performance 3.08% 3.27% -0.19%
YtD Performance -8.18% -7.77% -0.41%
1Y Volatility 32.3% 32.8% -0.5%
Perf.since inception 252.6% 194.4% 58.1%
Annualized Perf. 22.4% 18.9% 3.5%
2019 35.7% 31.5% 4.2%
2018 1.5% -4.4% 5.9%
Volatility 16.7% 17.0% -0.3%
Max Draw Down -32.7% -33.8% 1.0%
Inception Date 31 Aug 2011
US Global Leaders
May 26, 2020 14
Weights within the portfolio are comprised between 2% and 5%
Name TickerExch
CodeTheme Sector Mkt Cap ($bn)
Apple AAPL US Hardware Information Technology 1364.9
Microsoft MSFT US Software Information Technology 1244.9
Alphabet GOOGL US Internet Media Communication Services 992.6
Amazon AMZN US e-Commerce Consumer Discretionary 923.2
Facebook FB US Internet Media Communication Services 630.7
Berkshire Hathaway BRK/B US Investment Company Financials 558.3
JP Morgan JPM US Banks Financials 428.8
Visa V US Payment Technology Information Technology 393.3
Johnson & Johnson JNJ US Pharmaceuticals Health Care 386.9
Mastercard MA US Payment Technology Information Technology 317.0
Bank of America BAC US Banks Financials 306.3
Exxon XOM US Big Oil Energy 292.3
AT&T T US Big Telco Communication Services 276.6
Walt Disney DIS US Media & Entertainement Communication Services 260.1
Verizon VZ US Telcos Communication Services 244.4
Merck & Co MRK US Pharmaceuticals Health Care 233.1
Chevron CVX US Big Oil Energy 219.6
Pepsico PEP US Food Products Consumer Staples 194.1
Citigroup C US Banks Financials 171.7
Adobe ADBE US Software Information Technology 166.0
Nike NKE US Apparel Consumer Discretionary 160.1
McDonald's MCD US Restaurants Consumer Discretionary 158.0
Medtronic MDT US Medical Devices Health Care 157.3
Bristol Myers BMY US Pharmaceuticals Health Care 155.9
Costco COST US Mass Merchants Consumer Staples 132.9
Accenture ACN US IT Services Information Technology 131.8
Honeywell HON US Diversified Industrials Industrials 129.1
Starbucks SBUX US Restaurants Consumer Discretionary 108.1
Goldman Sachs GS US Banks Financials 90.4
Japanese Global Leaders
May 26, 2020 15
Total Return performance on both the portfolio and the index. The full list of constituents is available on our website.
-10
0
10
20
30
40
50
Japan Global Leaders Topix Total Return
Japan GL Topix Delta
Weekly Performance 0.58% 1.65% -1.08%
YtD Performance -9.80% -13.06% 3.27%
1Y Volatility 22.3% 20.3% 2.0%
Perf.since inception 18.0% -2.2% 20.2%
Annualized Perf. 8.9% -1.1% 10.0%
2019 31.6% 18.1% 13.5%
2018 -13.0% -16.0% 3.0%
Volatility 20.5% 17.4% 3.1%
Max Draw Down -28.1% -32.2% 4.1%
Inception Date 31 Aug 2017
Japanese Global Leaders
May 26, 2020 16
Weights within the portfolio are comprised between 4% and 15%
Name TickerExch
CodeTheme Sector
Mkt Cap
($bn)
Toyota Motor 7203 JT Automobiles Consumer Discretionary 228.0
Softbank Group 9984 JT Technology Conglomerate Communication Services 92.6
Sony 6758 JT Consumer Electronics Consumer Discretionary 91.8
Keyence 6861 JT Factory Automation Information Technology 86.8
Recruit Holdings 6098 JT Human Resources Industrials 65.3
Nintendo 7974 JT Video Games Communication Services 51.4
Nidec 6594 JT Precision Motors Industrials 41.0
Kao 4452 JT Household Products Consumer Staples 40.0
Shiseido 4911 JT Cosmetics Consumer Staples 28.6
Terumo 4543 JT Medical Devices Health Care 27.3
Komatsu 6301 JT Construction Machinery Industrials 23.2
Next-Gen Leaders
May 26, 2020 17
Total Return performance on both the portfolio and the index. The full list of constituents is available on our website.
-10
0
10
20
30
40
50
60
70
80
90
Next-Gen Leaders Nasdaq 100 Total Return
Next-Gen Nasdaq Delta
Weekly Performance 5.63% 2.90% 2.73%
YtD Performance 6.71% 8.25% -1.54%
1Y Volatility 33.3% 33.5% -0.3%
Perf.since inception 74.7% 65.1% 9.7%
Annualized Perf. 31.9% 28.3% 3.7%
2019 33.5% 39.5% -5.9%
2018 6.9% 0.0% 6.9%
Volatility 26.8% 25.2% 1.5%
Max Draw Down -32.9% -28.0% -4.9%
Inception Date 31 Jul 2017
Next-Gen Leaders
May 26, 2020 18
Weights within the portfolio are comprised between 2% and 5%
Name TickerExch
CodeGroup Theme Category Sector Risk Category
Mkt Cap
($bn)Country
Palo Alto Network PANW US B2B CyberSecurity Firewalls Information Technology Core 23.6 United States
CyberArk Software CYBR US B2B CyberSecurity Priviledged Access Information Technology Speculative 5.2 Israel
Illumina ILMN US B2B Health Care Diagnostics Health Care Core 47.1 United States
Stryker SYK US B2B Health Care Surgical Robot Health Care Core 77.4 United States
Intuitive Surgical ISRG US B2B Health Care Surgical Robot Health Care Core 69.0 United States
Cap Gemini CAP FP B2B Knowledge Consulting Information Technology Core 21.7 France
Splunk SPLK US B2B Knowledge Data Analysis Information Technology Speculative 24.3 United States
CoStar Group CSGP US B2B Knowledge Information Industrials Core 23.8 United States
IQVIA IQV US B2B Knowledge Pharmaceutical Research Health Care Core 30.9 United States
IHS Markit INFO US B2B Knowledge Research & Analytics Industrials Speculative 31.8 Britain
Gartner IT US B2B Knowledge Research & Analytics Information Technology Core 14.2 United States
Adobe ADBE US B2B Productivity Creativity & Design Information Technology Core 166.0 United States
Dassault Systemes DSY FP B2B Productivity Creativity & Design Information Technology Core 45.9 France
Autodesk ADSK US B2B Productivity Creativity & Design Information Technology Core 42.0 United States
Ansys ANSS US B2B Productivity Creativity & Design Information Technology Core 22.6 United States
Trimble TRMB US B2B Productivity IoT Information Technology Core 10.6 United States
Salesforce.com CRM US B2B Productivity SaaS - Productivity Information Technology Core 160.6 United States
Servicenow NOW US B2B Productivity SaaS - Productivity Information Technology Core 57.5 United States
Workday WDAY US B2B Productivity SaaS - Productivity Information Technology Core 41.2 United States
Coupa Software COUP US B2B Productivity SaaS - Productivity Information Technology Speculative 10.8 United States
Zalando ZAL GY B2C E-Commerce Retail Consumer Discretionary Speculative 13.2 Germany
Paypal PYPL US B2C FinTech Payment Technology Information Technology Core 134.9 United States
Square SQ US B2C FinTech Payment Technology Information Technology Speculative 30.2 United States
Wirecard WDI GY B2C FinTech Payment Technology Information Technology Speculative 17.7 Germany
Match Group MTCH US B2C Media Social Communication Services Speculative 25.5 United States
Activision Blizzard ATVI US B2C Media Video Games Communication Services Core 45.8 United States
Electronic Arts EA US B2C Media Video Games Communication Services Core 32.0 United States
Take-Two Interactive TTWO US B2C Media Video Games Communication Services Core 14.4 United States
Ubisoft UBI FP B2C Media Video Games Communication Services Speculative 8.7 France
Contacts
May 26, 2020 19
CONTACT US
Union Securities Switzerland S.A.
Address11 Cours de Rive
1204 Geneva, Switzerland
Let’s [email protected]
Want to know more about us ?
www.unionsecurities.ch
Union Securities Switzerland SA is a FINMA-registered Securities Dealer.
DisclaimerInvestment research – Risk information: USS researches are prepared and published by Union Securities Switzerland SA (regulated by FINMA in Switzerland) “USS”.
The investment views have been prepared in accordance with legal requirements designed to promote the independence of investment research.
This material is for your information only and is not intended as an offer, or a solicitation of an offer, to buy or sell any investment or other specific product. Certain services and
products are subject to legal restrictions and cannot be offered worldwide on an unrestricted basis and/or may not be eligible for sale to all investors. All information and opinions
expressed in this material were obtained from sources believed to be reliable and in good faith, but no representation or warranty, express or implied, is made as to its accuracy
or completeness (other than disclosures relating to USS). All information and opinions as well as any forecasts, estimates and prices indicated are current as of the date of this
report, and are subject to change without notice. The market prices provided in performance charts and tables are closing prices on the respective principal stock exchange. The
analysis contained herein is based on numerous assumptions. Different assumptions could result in materially different results. Opinions expressed herein may differ or be
contrary to those expressed by other business areas or divisions of USS as a result of using different assumptions and/or criteria.
In no circumstances may this document or any of the information (including any forecast, value, index or other calculated amount ("Values")) be used for any of the following
purposes (i) valuation or accounting purposes; (ii) to determine the amounts due or payable, the price or the value of any financial instrument or financial contract; or (iii) to
measure the performance of any financial instrument including, without limitation, for the purpose of tracking the return or performance of any Value or of defining the asset
allocation of portfolio or of computing performance fees. By receiving this document and the information you will be deemed to represent and warrant to USS that you will not use
this document or otherwise rely on any of the Information for any of the above purposes or otherwise rely upon this document or any of the information.
Opinions expressed herein may differ or be contrary to those expressed by other business areas or divisions of USS, as a result of using different assumptions and/or criteria.
USS and any of its directors or employees may be entitled at any time to hold long or short positions in investment instruments referred to herein, carry out transactions involving
relevant investment instruments in the capacity of principal or agent, or provide any other services or have officers, who serve as directors, either to/for the issuer, the investment
instrument itself or to/for any company commercially or financially affiliated to such issuers. At any time, investment decisions (including whether to buy, sell or hold securities)
made by USS and its employees may differ from or be contrary to the opinions expressed in USS research publications. Some investments may not be readily realizable since
the market in the securities is illiquid and therefore valuing the investment and identifying the risk to which you are exposed may be difficult to quantify. USS relies on information
barriers to control the flow of information contained in one or more areas within USS, into other areas, units, divisions or affiliates of USS. Futures and Options trading is not
suitable for every investor as there is a substantial risk of loss, and losses in excess of an initial investment may occur. Past performance of an investment is no guarantee for its
future performance. Additional information will be made available upon request. Some investments may be subject to sudden and large falls in value and on realization you may
receive back less than you invested or may be required to pay more. Changes in foreign exchange rates may have an adverse effect on the price, value or income of an
investment. The analyst(s) responsible for the preparation of this report may interact with trading desk personnel, sales personnel and other constituencies for the purpose of
gathering, synthesizing and interpreting market information. Tax treatment depends on the individual circumstances and may be subject to change in the future. USS does not
provide legal or tax advice and makes no representations as to the tax treatment of assets or the investment returns thereon both in general or with reference to specific client's
circumstances and needs. We are of necessity unable to take into account the particular investment objectives, financial situation and needs of our individual clients and we
would recommend that you take financial and/or tax advice as to the implications (including tax) of investing in any of the products mentioned herein. This material may not be
reproduced or copies circulated without prior authority of USS. Unless otherwise agreed in writing USS expressly prohibits the distribution and transfer of this material to third
parties for any reason. USS accepts no liability whatsoever for any claims or lawsuits from any third parties arising from the use or distribution of this material. This report is for
distribution only under such circumstances as may be permitted by applicable law. Forecasts and estimates are current only as of the date of this publication and may change
without notice. USS manages conflicts and maintains independence of its investment views and publication offering, and research and rating methodologies. Additional
information on the relevant authors of this publication and other USS publication(s) referenced in this report; and copies of any past reports on this topic; are available upon
request from your sales representative.
External Asset Managers / External Financial Consultants: In case this research or publication is provided to an External Asset Manager or an External Financial Consultant, USS
expressly prohibits that it is redistributed by the External Asset Manager or the External Financial Consultant and is made available to their clients and/or third parties.
Important notice USA: This document is not intended for distribution into the US, and/or to US persons, by USS personnel.
May 26, 2020 20
