CORONAVIRUS RATTLES THE MARKETS, BUT THE FUNDAMENTALS ARE SOLID - HOUSE VIEW FEBRUARY 2020
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HOUSE VIEW FEBRUARY 2020 CORONAVIRUS RATTLES THE MARKETS, BUT THE FUNDAMENTALS ARE SOLID
HOUSE VIEW. FEBRUARY 2020
HOW SHOULD WE POSITION OURSELVES
IN THE CURRENT LANDSCAPE?
Coronavirus rattles the markets, but the fundamentals are solid
ASSET ALLOCATION
ASSET CLASS -2 -1 NEUTRAL +1 +2
LIQUIDITY
FIXED-INCOME
EQUITY
ALTERNATIVE
FIXED-INCOME -2 -1 NEUTRAL +1 +2
SOVEREIGN DEBT
High quality (AAA)
Peripheral
CORPORATE BONDS
Investment Grade
High Yield
EMERGING DEBT
CONVERTIBLE BONDS
EQUITIES -2 -1 NEUTRAL +1 +2
EUROPE
United Kingdom
UNITED STATES
EMERGING
REST OF THE WORLD
CURRENCIES -2 -1 NEUTRAL +1 +2
U.S. DOLLAR
STERLING POUND
MACROECONOMIC LANDSCAPE
The improved macroeconomic figures in January support our outlook for a modest
recovery in global economic growth in 2020.
The improvement in the macro data registered in early 2020 supports our baseline scenario, which foresees a
modest recovery in global growth this year. Economic surprise indices (graph 1) have headed into positive ground,
which means the macro figures are managing to beat expectations. This trend further underpins our belief that
the cyclical slowdown in global economic activity has bottomed out between late 2019 and early 2020.
CORONAVIRUS RATTLES THE MARKETS, BUT THE FUNDAMENTALS ARE SOLID 6HOUSE VIEW. FEBRUARY 2020
In addition to the hefty monetary stimulus measures put in place by central banks in the second half of last year,
economic policy also lent support in the form of a Phase One trade deal between the US and China. The new deal
confirms a truce on the tariff hikes between the two global powers, at least until the US elections in November.
There are still, however, points of contention on which no such progress has been made – particularly in relation
to intellection property – and China’s targets for US purchases look, in some cases, very tough to achieve (graph 2).
1. ECONOMIC SURPRISE INDICES 2. PURCHASES OF US PRODUCTS
Source: Bloomberg and Banca March Source: BEA, Censas and Banca March
100 350
US imports by China 309
75 300 (m.m. $)
263
50
250
25
200 186
0
150
-25
100 87
-50
-75 50
-100 0
jan.-18 jul.-18 jan.-19 jul.-19 jan.-20 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2020*2021*
United States Euro-zone Emerging Manufacturing Energy Agriculture Services
The trade truce has been confirmed, which is good news for 2020 growth. However, there will be continued
uncertainty in the long term and we cannot rule out the possibility of further tensions between the two countries
when the time comes to negotiate issues like patent regulations, which could be up for discussion once the US
elections are out of the way.
However, the public health crisis stemming from China could delay this economic
upturn.
The coronavirus public health crisis that came out of China in January could stymie the improvement in global
economic growth. Uncertainty over the speed of transmission and the mortality rate of this epidemic has taken
its toll on the markets, and should the disease spread further, it would end up having a negative impact on the
global economy and particularly on Asia, which is expected to be one of the key drivers of the global economic
recovery this year.
3. CHINA: RETAIL SALES (SARS VS. CURRENT)
Source: Bloomberg and Banca March
12
11
10
9
8
7
6
2002-2003
5
4 2019-2020
3
2
-12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12
CORONAVIRUS RATTLES THE MARKETS, BUT THE FUNDAMENTALS ARE SOLID 7HOUSE VIEW. FEBRUARY 2020
In similar situations in the past, like the SARS outbreak, the impact on China’s GDP growth was temporary
and globally, the effects were negligible. Increased spending on infrastructure and other measures to support
consumer spending allowed the Asian economy to recover swiftly from the dip in economic activity. For now, in
the absence of more specific information on the contagion rate, it is fair to expect a similar performance in terms
of growth if the epidemic is successfully contained in the coming months.
As we explain in Health crises, the economy and the markets, it is worth noting that the Chinese economy, which
accounts for 19% of global GDP, now has a major influence on global growth, and that private consumption is the
main economic driver in the country, accounting for 75% of Chinese GDP growth in 2018. What’s more, as we can
see from graphs 4 and 5, the weight of the service sector is currently very significant both in terms of activity and
employment. In 2002, the service sector represented just 29% of Chinese employment; in 2018, it accounted for
46% of the total. It is possible, therefore, that there could be a more severe slowdown in China’s economy - and
the global economy in turn - than in 2003. Given the increased dependence of Chinese growth on the sectors that
are most heavily impacted by the measures taken to contain the epidemic (services), coupled with the increased
weighting of the Chinese economy within global GDP, we now see increased downside risks for growth.
4. CHINA: GDP BY SECTOR (%) 5. CHINA: EMPLOYMENT BY SECTORS (%)
Source: Bloomberg and Banca March Source: Bloomberg and Banca March
60 60
54
50
50 50
45 46
40 42 39 40
30 30 29 28
21 26
20 20
13
10 10
7
0 0
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18
Primary Secondary Tertiary Primary Secondary Tertiary
These two factors lead us to believe that Chinese economic growth will not pick up until at least the second
quarter of the year, which would necessitate a downgrade of the 2020 year-on-year growth forecast of 5.8% we
issued at the beginning of the year. The growth rate could actually dip to 0.3 to 0.5 percentage points below that
level, depending on how far the epidemic spreads and on the extraordinary measures taken to contain the virus.
The Asian authorities are responding convincingly and we expect to see fiscal stimulus measures over the coming
weeks to complement the measures that have already been announced.
European slowdown begins to taper…
In January, early figures for the eurozone economy outperformed expectations, suggesting that the severe
downturn in activity registered last year should begin to ease off in the months ahead. There was a marked
improvement in business confidence in the manufacturing sector, which rose to 47.9 in January after hitting a low
in September last year, at the height of the global trade tensions.
CORONAVIRUS RATTLES THE MARKETS, BUT THE FUNDAMENTALS ARE SOLID 8HOUSE VIEW. FEBRUARY 2020
6. BUSINESS CONFIDENCE The upward trend in business confidence intensified
Source: Bloomberg and Banca March in January, although the improvement is still tenuous
62
and remains at levels which are consistent with a
60 contraction in economic activity (under 50). This data
58 also confirms that the weakness of the industrial
56 sector has not spread to the rest of the economy, and
54 we maintain our view that the region will achieve a
52 52,5
51,3
modest recovery in activity over 2020, with year-on-
50 year GDP growth of 1.2%.
48 47,9
46
44
jan.-18 apr.-18 jul.-18 oct.-18 jan.-19 apr.-19 jul.-19 oct.-19 jan.-20
Composite PMI Threshold Manufacturer PMI Services PMI
… but Brexit will continue to feature heavily on the economic policy agenda in 2020. Is there
further uncertainty ahead around the UK’s withdrawal process?
On the much-heralded date of 31 January, the UK’s departure from the EU was confirmed. This event marks the
beginning of a new period of ongoing negotiations which will, no doubt, also generate uncertainty around the
future of the region.
Now that the withdrawal agreement has been signed by both sides the so-called transition period begins, which is
expected to end on 31 December 2020. The UK and the EU will have just 11 months to reach and ratify some kind
of trade deal to govern the exchange of goods and services in the future. In addition, the UK will only be able to
request an extension to the transition phase until 1 July 2020, and Johnson’s government has already announced
that it does not intend to do so. That said, if there’s one thing the whole Brexit debacle has made clear, it is that
many of the previously-stipulated rules and deadlines can be modified if it is in both parties’ interests.
TIMEFRAME FOR THE TRANSITION PERIOD AND POTENTIAL SCENARIOS
Requests Extension to
December
extension 2020 or 2021
31 January 31 June
The UK leaves the EU
and the transition Deadline for UK YES
period begins to request The new bilateral
extension agreement comes
Does not 31 December into effect
requests EU and UK
extension reach an
agreement? NO
No deal Brexit
CORONAVIRUS RATTLES THE MARKETS, BUT THE FUNDAMENTALS ARE SOLID 9HOUSE VIEW. FEBRUARY 2020
As the diagram shows, whilst it is unlikely, we cannot yet completely rule out a no-deal Brexit, as that is what
would happen if no framework for future trade had been agreed by the end of the year and/or the UK does not
request an extension to the transition phase. Whilst it seems unlikely that the two parties will be able to reach
an exhaustive, ambitious deal in just 11 months, we do believe it is feasible that they could reach a bare bones
agreement which would avoid a disorderly departure, and see negotiations continue over the coming years until
complete agreements have been sealed.
7. UK EXPORTS (% TOTAL) The importance of these negotiations with Brussels
Source: ONS - UK Government and Banca March is paramount; as graph 7 shows, the EU is the UK’s
50% largest export destination, both for goods (45% of
the total) and for services (40%). With that in mind,
40% despite the “threats” and promises made by Johnson’s
government, it is crucial for British companies that
Property
30% the UK remains aligned with EU rules and maintains
access to the single market.
Services
20%
10%
0%
E.U. USA China Japan Canada Australia
Our baseline scenario is that a bare bones agreement will be reached that includes at least the trade of goods
with zero or very low tariffs, in exchange for regulatory alignment between the UK and the EU on trade in goods.
However, other areas like trade in services (particularly focused on the financial sector), intellectual property and
movement of people will likely require a longer deadline for negotiations given the greater degree of complexity.
As for economic growth, after the Brexit referendum the economy suffered a marked downturn due to the
spike in political uncertainty, and in 2019, GDP grew by just 1.1% year on year. In January, however, UK business
confidence has made a robust recovery, which augurs a clear uptick in activity over the coming months.
8. GDP AND BUSINESS CONFIDENCE UK As graph 8 shows, the UK’s composite PMI rose to
Source: Bloomberg and Banca March 53.3 in January, which would be consistent with an
0,8 56
increase in GDP growth in the first half of the year to
55 at least +0.4% per quarter.
0,6
53,3 54
0,4 53
52
0,2
51
0,0
50
-0,2 49
49,3
48
-0,4
47
-0,6 46
1T 2017 3T 2017 1T 2018 3T 2018 1T 2019 3T 2019 1T 2020
Quarterly GDP Composite PMI (right)
This rise in business confidence is based on the improved clarity in relation to the UK’s withdrawal process from
the EU, but is also due to the expectations of an imminent fiscal stimulus package, which will likely be announced
during the first quarter of the year, following the Conservative Party’s victory in the December elections. All of
these factors underpin the improved outlook for UK economic growth in the quarters ahead.
CORONAVIRUS RATTLES THE MARKETS, BUT THE FUNDAMENTALS ARE SOLID 10HOUSE VIEW. FEBRUARY 2020
CENTRAL BANKS AND FIXED INCOME
Stimulus measures remain in place and the FED will buy bonds at least until April.
The last ECB meeting left interest rates untouched. The stimulus measures approved by the central bank last summer
were also confirmed. At the subsequent press conference, Lagarde outlined some of the goals for her mandate,
including an in-depth strategic review. The intention of these changes is to align the central bank’s tools and purposes
with the new challenges facing the European economy: the environmental transition and population ageing. She also
expressed concerns around the struggle to achieve the 2% target, despite powerful monetary stimulus measures, and
talked about greater flexibility and the introduction of target bands, rather than a fixed goal. The ECB is also going to
ask Eurostat to undertake a review of the inflation calculation method, which should conclude before December.
Elsewhere, the Fed kept the interest rate in the 1.50% – 1.75% range. Jerome Powell attributed the decision to strong
employment figures, the lowest unemployment rate for 50 years, and an improvement in confidence indicators. He also
reiterated the Fed’s commitment to keeping inflation at its target of 2%. On the repo market, Powell said purchases
would be pared back in the first half of the year but that repo operations would continue until at least April. He also
mentioned the coronavirus and expressed concern over the situation in China. However, he said it was too soon to draw
clear conclusions and that the Fed would continue to monitor the impact on the global economy.
Contrary to expectations, the Bank of England also left interest rates untouched.
In the days leading up to the Bank of England meeting, the market was pricing in a 70% chance of a rate cut, given
the weak macro data and poor inflation figures, but the central bank decided to hold rates steady. The BoE believes
that the improvement in the global economy, in addition to the diminished uncertainty around Brexit and the fiscal
stimulus measures pledged by the Conservative party – which, according to its estimates, will add 0.4% to 2020
growth – will be sufficient catalysts for the country’s economy over the coming months. We believe this decision
leaves room for the UK economy to improve and will allow for coordinated fiscal and monetary policy actions.
Futures are pricing in rate cuts in summer (68% chance) or autumn (74% chance).
Following the upgraded recommendation last month, European investment grade credit
outperformed on the back of the ECB’s purchases.
9. ONCE AGAIN, DURATION OFFERS A SOURCE The increased risk appetite in the last quarter of 2019 led
OF PROTECTION to a drop in European and US government bond prices.
Source: Bloomberg
The accumulated yield from 30 August to year-end 2019
2 0,6 stood at -4.52% for the 10-year Bund and -2.25% for the
1,8
0,4 10-year Treasury. However, the uncertainty generated
Outbreak of the
0,2 by the Wuhan coronavirus has driven bond prices back
1,6 Wuhan crisis
0,0
up, with positive yields of 3% for the Treasury and 2.5%
TIR
TIR
1,4
-0,2
for the Bund since January.
-0,4
1,2
-0,6
1 -0,8
aug.-19 sep.-19 oct.-19 nov.-19 dec.-19 jan.-20
USA Germany
CORONAVIRUS RATTLES THE MARKETS, BUT THE FUNDAMENTALS ARE SOLID 11HOUSE VIEW. FEBRUARY 2020
Likewise, investor concerns also worked in favour of high-rated European credit and against lower-rated debt.
The European aggregate investment grade bond index gained 1.88% in January, whilst the high yield index lost
0.20% over the same period. As we anticipated last month, when we upgraded our recommendation, high-rated
European credit will be buoyed by the ECB’s purchases, which will support narrowing spreads and continued low
base rates.
10. ECB PURCHASES BUOY EUROPEAN IG
Source: Bloomberg and ECB
Corporate sector purchase program (CSPP)
40
20
0
-20
-40
-60
-4 -2 0 2 4 6 8 10 12 14 16 18
Months
CSPP March 2016 Current CSPP
Bonds denominated in hard currencies have not been impacted by the 2019-nCov infection, but
the epidemic has rattled bonds denominated in local currencies.
Since the beginning of the year, hard currency-denominated fixed income is up 1.7%, whilst bonds in local currencies
are down by 0.5%. We continue to believe that bonds denominated in hard currency are currently the most compelling
fixed income category.
11. RELATIVE PERFORMANCE YEAR TO DATE (%)
Source: Bloomberg and ECB
102
101,5
101
100,5
100
99,5
99
31-dec. 5-jan. 10-jan. 15-jan. 20-jan. 25-jan. 30-jan.
Wuhan crisis EM hard currency EM local currency
CORONAVIRUS RATTLES THE MARKETS, BUT THE FUNDAMENTALS ARE SOLID 12HOUSE VIEW. FEBRUARY 2020
CURRENCIES
Our target for the euro-dollar cross remains at 1.15. However, a deterioration in the health
crisis in China would delay the dollar’s decline.
The fundamental factors that have hampered the euro’s performance against the dollar are gradually relenting.
From a political perspective, uncertainty around Brexit has now tapered off. From an economic perspective,
however, the growth spread between the US and Europe is likely to narrow throughout 2020; we forecast
growth of 1.8% for the US and 1.2% for Europe. What’s more, the US public deficit and trade deficit continue to
grow, which will likely support the appreciation of the euro.
However, any temporary episodes of risk, such as the current situation in China, could generate inflows into haven
currencies such as the dollar, Swiss franc and yen.
12. CURRENCY MOVEMENTS VERSUS THE DOLLAR IN THE WAKE OF THE WUHAN CRISIS
Source: Bloomberg
EM CURRENCIES DEVELOPED MARKET CURRENCIES
Rusia -3,3%
Corea del Sur -3,0%
Sudáfrica -2,8%
China -2,3%
Tailandia -2,1% 2%
Brasil -2,0%
Turquía -1,7% 1,3%
Singapur -1,6%
Malasia 1%
-1,4%
Taiwan -1,2%
Argentina -0,8% 0,2%
Indonesia -0,7%
India 0%
-0,4%
Vietman -0,1%
-0,2%
-0,3%
Hong Kong 0,0%
Filipinas 0,1%
-1%
-4% -3% -2% -1% 0% 1% Yen Franco suizo Libra Euro
We expect to see a strong pound, at the higher end of the target range of 0.83 - 0.87.
We believe that the pound will remain stable at the higher end of the target range thanks to the upturn in the UK
economy anticipated by the manufacturing PMI in January. The implementation of fiscal stimulus measures when
the British government announces its budget should afford another source of support. This will all coincide with
the extensive Brexit negotiation process that will now be resumed; we will not know until 31 July whether or not
the UK is to submit a formal request for an extension to the negotiations with the EU. We are highly likely to see
further disputes between the two parties over the months ahead. Finally, it is very likely that the Bank of England
will continue to put off cutting interest rates over the next few months, which would mean that the economy is
performing well and would further strengthen the pound.
CORONAVIRUS RATTLES THE MARKETS, BUT THE FUNDAMENTALS ARE SOLID 13HOUSE VIEW. FEBRUARY 2020 EQUITIES The coronavirus outbreak in China has shaken the markets in early 2020, but indices have managed to claw back previous levels. Following the early losses and after the Chinese equity markets reopened, most indices have managed to recover the levels they were trading at before news of the health crisis broke, and the US and European markets have even managed to chalk up record highs. This has not been the case for the emerging markets, which are 5.1% below record highs, and both the Hang Seng and the Shanghai CSI 300 have lost 7%. Historically, health crises have afforded compelling opportunities to buy, thanks to stimulus measures put in place by governments and central banks. We remain neutral for now as we await any potential opportunities that may arise. As we discussed above, the hefty stimulus measures implemented by the authorities to tackle confidence and uncertainty shocks such as those generated by health crises tend to afford attractive opportunities to buy. We are aware that the SARS epidemic took place at a very different point in the cycle, just a few months after the tech bubble bottomed out and very close to the invasion of Iraq (20 March 2003), and so the situations are not strictly comparable. Nonetheless, it is worth analysing the way the market rallied at that time. In July 2004, a year after the SARS epidemic was officially declared contained, the S&P 500 was up 17%, the Hang Seng 24% and the MSCI Asia ex Japan 19%. In the case of bird flu, a year after the WHO declared the outbreak contained in August 2009, the S&P 500 was up 15%, the Hang Seng 5.5% and the MSCI Asia 21%. On this occasion, the markets have responded surprisingly quickly and positively. In our view, it would be excessive to expect higher prices regardless of the stimulus measures that may lie ahead, given that the data we have to date shows that the new coronavirus has infected 5 times more people than SARS did. In addition, just as it did in 2003, the death rate could rise over the coming weeks as the already high number of people infected grows even further (more than 40,600 people have already caught the virus). Our recommendation is firm. Despite the slowdown in the global economy that the coronavirus will entail, we believe it is important to remain calm, holding positions in equities and awaiting any potential opportunities that could arise in the coming days and weeks in episodes of volatility. Just as they have in the past, these opportunities are very likely to crop up. We reiterate our positive outlook for equities in 2020, thanks to the accommodative policies rolled out by central banks; the resulting low interest rates and high liquidity will allow for a recovery of corporate earnings, which we expect to be up by 5% globally. By regions, we also reiterate our positive outlook for the UK and emerging Asia. Following the UK’s official departure from the EU, an agreement will be reached – just as it was in the previous phase of negotiations – even if it is only a bare bones agreement, especially given that the EU is the UK’s largest trading partner. These expectations, coupled with the attractive relative valuation of the UK versus continental European equity markets, are the reason we are maintaining our positive outlook for the UK, focusing particularly on the companies with the most exposure to the domestic economy and limited exposure to a strong pound. CORONAVIRUS RATTLES THE MARKETS, BUT THE FUNDAMENTALS ARE SOLID 14
HOUSE VIEW. FEBRUARY 2020
13. RELATIVE VALUATIONS (P/E RATIO MSCI UK / MSCI EUROPE)
Source: Bloomberg and Banca March
115
110
105
100
95
90
85
80
06 07 08 09 10 11 12 13 14 15 16 17 18 19 20
Likewise, despite the headwinds generated by the coronavirus outbreak for Chinese growth, we also maintain
our positive outlook for emerging market equities, given their substantial weight as a proportion of global
GDP (approx. 60%) and contribution to global growth (over 80%), the significant under-representation of EM
companies in the main global indices (12% of the MSCI World) and the fact that they are trading at a discount of
25% vs the rest of the world. Within the EM region, we particularly like Asia.
At the sector level, we continue to recommend being overweight technology, health in
Europe, and energy. The tech sector is outperforming thanks to strong corporate earnings.
Despite its significant cyclical component, the tech sector continues to outperform – it has gained 7.8% year to
date – largely due to strong corporate earnings. Apple, for example, posted record revenues in its first financial
quarter (+9%, $91.82bn) on the back of iPhone sales (which were up 8% over the quarter and now account for
over half of all revenues) as well as sales of apps, AirPods, and smart watches. The group expects this positive
trend to continue in the current quarter, although it will be closely monitoring the uncertainty related to the
coronavirus in China, its second largest market. Amazon chalked up record quarterly results again with growth
in both profit (8%) and sales (21%), thanks to a reduction in costs and improved efficiency of logistics functions.
Microsoft put in a similar performance, with record quarterly sales (+14%) driven by the significant increase in its
cloud business, which posted a 39% increase in revenues and a considerable improvement in margins.
So far, around a third of the technology names on the S&P have published results, with earnings up by 5.4% and
revenues up by 5%, and positive surprise ratios of 100% for earnings and 86% for revenues, both of which are
very high. As a whole, the sector continues to trade at near-average levels, as these companies’ excellent share
performance has been accompanied by a no-less-brilliant operating performance.
TABLE 1. MSCI WORLD. PERFORMANCE BY SECTORS
Evolution (%) eeks (%) Rtb.
SECTOR
17/01/2020 YTD Max Min Div. (%)
Technology 1,98 7,80 -0,95 44,86 1,25
Discretionary spending -0,52 1,55 -0,91 19,65 1,75
Financial -0,28 0,44 -0,79 17,35 3,23
Healthcare -0,60 2,04 -1,01 23,82 1,77
Industry -0,89 1,68 -1,11 17,45 2,09
Materials -2,75 -3,46 -3,97 11,63 3,18
Utilities 2,45 5,95 -0,54 20,24 3,28
Real estate 0,14 2,26 -0,33 10,98 3,23
Telecom -1,11 3,03 -1,63 21,29 1,70
Consumer goods -0,15 1,45 -0,41 16,24 2,62
Energy -8,21 -8,70 -16,94 2,07 4,90
MSCI World -0,45 2,10 -0,59 19,76 2,29
CORONAVIRUS RATTLES THE MARKETS, BUT THE FUNDAMENTALS ARE SOLID 15HOUSE VIEW. FEBRUARY 2020
This strong performance is juxtaposed against losses in the energy sector, which has been hit hard by the drop
in oil prices (-8.7% vs -18% Brent); expectations that the Chinese economy could lose steam in the early part of
the year have given rise to a major drop in crude imports to the country. According to some Chinese refiners,
the decline in demand for crude this month will stand at 25%, equivalent to 3.2 million barrels/day and 3% of
global demand. To put that into perspective, Chinese demand stood at an average of 13 million barrels per day in
February last year.
OPEC is currently preparing oil output cuts, at least partly to adapt supply to the lower demand from China.
Specifically, it is expected to slash production by between 0.5 and 1 million barrels per day.
We are not inclined to cut exposure to the sector, although we are very conscious of the difficulties it faces in the
short term. We believe it has been hit excessively hard and that compelling valuations, reasonable debt levels,
a strong cash position which is sustainable at current (or even lower) crude prices and attractive dividends all
underpin our outlook for the sector.
14. PREMIUM/DISCOUNT 12M P/E RATIO BY SECTORS MSCI EUROPE
Source: Refinitiv, Bloomberg and Banca March
45%
Expensive*
30%
Industry
Utilities
Materials 15%
Consumer Def.
Healthcare 0%
IT
Discretionary spending
Financial -15%
Cheap*
Energy
-30%
Telecom
-45%
-30% -20% -10% 0% 10% 20% 30%
RETURN relative to MSCI Europe in 12 months
Banca March Market Strategy Team:
Joan Bonet Majó
Pedro Sastre
Luis Coello
Paulo Gonçalves, CAIA
Adrian Santos
CORONAVIRUS RATTLES THE MARKETS, BUT THE FUNDAMENTALS ARE SOLID 16HOUSE VIEW. FEBRUARY 2020
EURIBOR EURIBOR 12 MONTHS (3 YEARS)
LAST 1 MONTH YTD 1 YEAR 0
1 MONTH -0,45 -0,44 -0,44 -0,37 -0,05
3 MONTHS -0,39 -0,38 -0,38 -0,31 -0,1
6 MONTHS -0,34 -0,32 -0,32 -0,24 -0,15
12 MONTHS -0,28 -0,25 -0,25 -0,11
-0,2
-0,25
-0,3
CURRENCIES
-0,35
LAST 1 MONTH YTD 1 YEAR
-0,4
EUR/USD 1,1093 1,123 1,123 1,142
-0,45
EUR/GBP 0,840 0,847 0,847 0,874 feb.-17 may-17 aug.-17 nov.-17 feb.-18 may-18 aug.-18 nov.-18 feb.-19 may-19 aug.-19 nov.-19
EUR/CHF 1,069 1,085 1,085 1,141
EUR/JPY 120,2 122,0 122,0 125,1
EUR/USD (3 YEARS)
GOVERNMENT BONDS
1,3
LAST 1 MONTH YTD 1 YEAR
2 YEARS 1,31 1,57 1,57 2,46 1,25
5 YEARS 1,31 1,67 1,67 2,44
USA 1,2
10 YEARS 1,51 1,88 1,88 2,63
30 YEARS 2,00 2,33 2,33 3,00 1,15
2 YEARS -0,67 -0,60 -0,60 -0,56
5 YEARS -0,64 -0,47 -0,47 -0,32 1,1
GERMANY
10 YEARS -0,43 -0,19 -0,19 0,15
1,05
30 YEARS 0,07 0,35 0,35 0,75
2 YEARS -0,43 -0,39 -0,39 -0,26 1
5 YEARS -0,23 -0,08 -0,08 0,20 feb.-17 may-17 aug.-17 nov.-17 feb.-18 may-18 aug.-18 nov.-18 feb.-19 may-19 aug.-19 nov.-19
SPAIN
10 YEARS 0,24 0,47 0,47 1,20
30 YEARS 1,13 1,32 1,32 2,38
2 YEARS 0,50 0,59 0,59 0,76
10 YEAR GOVERNMENT YIELDS (SPAIN VS GERMANY)
5 YEARS 0,41 0,65 0,65 0,87
UK
10 YEARS 0,52 0,87 0,87 1,22
2
30 YEARS 1,04 1,38 1,38 1,72
1,5
CORPORATE BONDS (1 YEAR SPREAD) 1
LAST 1 MONTH YTD 1 YEAR
0,5
AA -0,28 -0,26 -0,26 -0,15
0
A -0,26 -0,26 -0,26 -0,07
BBB -0,16 -0,16 -0,16 0,10 -0,5
-1
COMMODITIES feb.-17 may-17 aug.-17 nov.-17 feb.-18 may-18 aug.-18 nov.-18 feb.-19 may-19 aug.-19 nov.-19
LAST 1 MONTH YTD 1 YEAR
BRENT 58,16 66,00 66,00 61,65
GOLD 1589,2 1517,3 1517,3 1319,9
IBEX (3 YEARS)
11000
EQUITY INDICES
10500
LAST 1 MONTH YTD 1 YEAR
10000
MSCI WORLD* 558,62 -1,17% -1,17% 32,42%
SP500 3225,52 -0,16% -0,16% 44,07% 9500
EUROSTOXX50 3640,91 -2,78% -2,78% 13,80% 9000
TOPIXX 1721,36 -2,10% -2,10% 13,35%
8500
IBEX35 9367,9 -1,90% -1,90% 1,10%
8000
FOOTSIE100 7286,01 -3,40% -3,40% 5,60%
MSCI BRAZIL 2192,91 -7,59% -7,59% 31,17% 7500
MSCI CHINA 81,29 -5,15% -5,15% 38,60% 7000
MSCI EMERGING 1062,34 -4,69% -4,69% 29,30% feb.-17 may-17 aug.-17 nov.-17 feb.-18 may-18 aug.-18 nov.-18 feb.-19 may-19 aug.-19 nov.-19
* All countries Data: Bloomberg
CORONAVIRUS RATTLES THE MARKETS, BUT THE FUNDAMENTALS ARE SOLID 17HOUSE VIEW. FEBRUARY 2020
160%
EQUITY INDICES
PERFORMANCE
(3 YEARS) 140%
Data: Bloomberg
IBEX REL 120%
MSCI EMERGENTES REL
SP500 REL
100%
80%
60%
40%
mar.-17 jun.-17 sept.-17 dec.-17 mar.-18 jun.-18 sept.-18 dec.-18 mar.-19 jun.-19 sept.-19 dec.-19
IBEX rel MSCI Emergentes rel SP500 rel
*DATA AS OF 31 JANUARY 2020
RETURN DURATION PORTFOLIO DISTRIBUTION
MONTH YTD 1 YEAR CURRENT 1 MONTH AGO FIXED INCOME EQUITY ALT. INV.
MARCH RENDIMIENTO F.I. -0,01% -0,01% -0,38% 0,231 0,189 33,60% 0,00% 0,00%
MARCH RENTA FIJA CORTO PLAZO F.I. 0,08% 0,08% 0,77% 0,453 0,454 71,59% 0,00% 0,00%
MARCH PATRIMONIO C.P. F.I. 0,09% 0,09% 0,62% 0,701 0,615 73,85% 0,00% 0,00%
FONMARCH F.I. 0,35% 0,35% 2,05% 2,225 2,360 90,17% 0,00% 0,00%
MARCH EUROPA F.I. -2,13% -2,13% -5,06% 0,003 0,003 0,00% 96,51% 0,00%
MARCH INTL - VALORES IBERIAN EQUITY -3,58% -3,58% 4,73% 0,003 0,003 0,00% 98,71% 0,00%
MARCH GLOBAL F.I. -3,46% -3,46% 14,40% 0,003 0,003 0,00% 94,17% 0,00%
MARCH INTL - MARCH VINICATENA -4,08% -4,08% 0,28% 0,003 0,003 0,00% 96,62% 0,00%
MARCH INTL - THE FAMILY BUSINESSES FUND -0,65% -0,65% 14,44% 0,003 0,003 0,00% 90,98% 0,00%
MARCH INTL - MEDITERRANEAN FUND -0,74% -0,74% 0,00% 85,67% 0,00%
MARCH NEW EMERGING WORLD F.I.* -3,67% -3,67% 1,41% 0,003 0,003 0,00% 95,68% 0,00%
TORRENOVA DE INVERS. S.I.C.A.V. S.A. -0,51% -0,51% 3,29% 0,996 1,034 65,28% 17,29% 0,00%
CARTERA BELLVER S.I.C.A.V., S.A. -1,20% -1,20% 5,68% 1,069 1,103 42,44% 49,46% 0,00%
LLUC VALORES S.I.C.A.V., S.A. -2,04% -2,04% 8,59% 0,003 0,003 0,00% 85,11% 0,00%
MARCH INTL - TORRENOVA LUX -0,51% -0,51% 2,64% 0,003 0,003 71,19% 17,29% 0,00%
MARCH INTL BELLVER LUX -1,21% -1,21% 2,42% 29,93% 47,68% 0,00%
MARCH INTL LLUX LUX -2,13% -2,13% 4,60% 0,00% 86,33% 0,00%
MARCH PATRIMONIO DEFENSIVO F.I.* 0,11% 0,11% 1,05% 0,003 0,003 60,66% 2,54% 31,17%
MARCH CARTERA CONSERVADORA F.I.* -0,07% -0,07% 3,30% 0,003 0,003 44,73% 20,09% 30,91%
MARCH CARTERA MODERADA F.I.* -0,26% -0,26% 6,08% 0,003 0,003 25,14% 43,31% 27,51%
MARCH CARTERA DECIDIDA F.I.* -0,95% -0,95% 7,95% 0,003 0,003 1,29% 72,31% 23,13%
PLAN PENSIÓN CRECIENTE, F.P. 0,15% 0,15% 1,05% 1,532 1,465 88,72% 0,00% 0,00%
MARCH PENSIONES 80/20, F.P. -0,47% -0,47% 5,64% 2,168 2,188 64,49% 24,26% 0,00%
MARCH PENSIONES 50/50, F.P. -1,20% -1,20% 9,00% 1,837 1,874 40,75% 45,17% 0,00%
MARCH ACCIONES, F.P. -2,39% -2,39% 17,06% 0,003 0,003 0,00% 83,37% 0,00%
MARCH AHORRO, F.P. -0,73% -0,73% 7,40% 2,207 2,197 59,76% 33,41% 0,00%
PLAN ÓPTIMO, F.P. -0,77% -0,77% 6,77% 2,108 2,105 55,41% 30,89% 0,00%
MARCH MODERADO EPSV -0,59% -0,59% 4,88% 1,504 1,500 51,32% 22,36% 0,00%
MARCH ACCIONES EPSV -2,37% -2,37% 16,64% 0,008 0,005 0,00% 84,41% 0,00%
CORONAVIRUS RATTLES THE MARKETS, BUT THE FUNDAMENTALS ARE SOLID 18HOUSE VIEW. FEBRUARY 2020 IMPORTANT REMARK: The contents of this document are merely illustrative and do not pretend, are not and cannot be considered under any circumstances as an investment recommendation towards the contracting of financial products. This document has only been prepared to help the customer make an independent and individual decision but does not intend to replace any type of advice needed for the contracting of such products. The terms and conditions described in this document are to be viewed as preliminary terms only, subject to discussion and negotiation as well as to the agreement and final drafting of the terms affecting the transaction, which will appear in the contract or certificate to be issued. Consequently, Banca March, S.A.. and its customers are not bound by this document unless both parties decide to embark on a specific transaction and agree on the terms and conditions concerning the final documents to be approved. Banca March, S.A.. does not offer any guarantee, expressly or implicitly, in relation with the information shown in this document. All terms, conditions and prices contained in this document are merely informative and subject to modifications depending on the market circumstances, changes in laws, jurisprudence, administrative procedures or any other issue which may affect them. The customer should be aware that the products mentioned in this document may not be appropriate for his/her specific investment targets, financial situation or risk profile. For this reason the customer must make his/her own decisions by taking into account such circumstances and by obtaining specialised advice in tax, legal, financial, regulatory, accounting issues or any other type of information required. Banca March, S.A.. does not assume any responsibility for any direct or indirect costs or loss which may result from the use of this document or its contents. No part of this document can be copied, photocopied or duplicated in any way or through any means, redistributed or quoted without a previous written authorisation by Banca March, S.A. CORONAVIRUS RATTLES THE MARKETS, BUT THE FUNDAMENTALS ARE SOLID 19
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