Economic & Political Roundup
Kindly sponsored by Allianz
A collation of recent insights on markets and economies taken from the comments made by chairmen and investment managers of investment companies – have a read and make your own minds up. Please remember that nothing in this note is designed to encourage you to buy or sell any of the companies mentioned.
Covid-19’s devastating impact on so many real economies across the world will leave a lasting scar, probably permanently re-shaping many industries. For their part, markets took a glass half-full view, counter-attacking dogmatically over April to turn the tide after the complete collapse in sentiment in late-March.
Unprecedented fiscal and monetary stimulus, coupled with encouraging news-flow from South-East Asia and hopes that some of the existing therapies being tested might deliver clinically significant results, have driven this.
Like last month, we have included key statements from updates released by companies who did not report results over April. Compared to last month, this section is thinner, given that many companies briefed last month. On the flipside, extracts from the results section covers covid-19 more densely, with companies having had more time to react and reflect than those that reported in late-March.
|Change on month %
|GBP / USD
|USD / EUR
|USD / JPY
|USD / CHF
|USD / CNY
|Change on month %
|US Tsy 10 yr yield
|UK Gilt 10 yr yield
|Bund 10 yr yield
Dan Whitestone, manager of BlackRock Throgmorton – 27 April:
“It is our belief that this virus will result in the structural withdrawal of capacity in many industries, and therefore we are likely to enter a period of heightened “corporate Darwinism” will that will create opportunities for those survivors with the financial resources to win market share and further solidify their market position.”
Gresham House Strategic – 6 April:
“The longer-term repercussions of the use of helicopter money and the level of fiscal stimulus taking government debt to previously unacceptable levels await us all.”
CVC Credit Partners European Opportunities – 24 April:
“The impact of the covid-19 epidemic on markets as a whole and leveraged credit markets in particular has served to reconfirm the board’s view that it is desirable to reassess the company’s dividend distribution basis.”
Alcentra European Floating Rate Income – 15 April:
“While the S&P default rate for the 12 months ending March remained broadly stable at 0.43%, the impact of the virus on certain corporates is likely to lead to an increase from this low level.”
Technology and media
Tim Levene, CEO of Augmentum Fintech– 16 April:
“We expect several of our holdings to perform counter-cyclically.”
Doric Nimrod Air One – 21 April:
“Cirium estimates that more than 11,500 widebodies, narrow bodies and regional jets have been parked due to the pandemic as of the end of March 2020, representing approximately 44% of the total global fleet.
Chinese passenger numbers have begun to increase and that passenger yields have stabilized, with March domestic yields thus far slightly exceeding those in the same month during 2019.”
Renewable energy infrastructure
US Solar – 23 April:
“We do not expect covid-19 to materially impact construction timelines or operating cashflows.”
NextEnergy Solar – 8 April:
“Of the market revenues derived from the sale of electricity generation, the company has secured fixed price agreements covering 95% of its electricity generation for the summer of 2020 and fixed price agreements covering 50% of its electricity generation for the 2020/21 winter.”
Gore Street Energy Storage – 1 April:
“In the longer term, the trend toward more use of alternative energy in the UK, Europe, and beyond will continue. The income that our assets produce is neither directly impacted by either energy demand nor prices, as we principally sell hours of access to our projects for the grid.”
Property – UK
Alternative Income REIT – 24 April:
“As at the date of this announcement, the group confirms that it had received 82% of the rents which were due on the March 2020 rent quarter day in respect of forthcoming quarter Despite having fundamentally sound business models, some of the group’s tenants are experiencing unprecedented short-term disruption to their operations, which is impacting their near-term cash flows.”
Tritax Big Box REIT – 8 April:
“We expect that 96% of rents will be collected by the end of May 2020 in respect of advanced quarterly rental payments that were due by 1 April 2020.”
Property – UK healthcare
Target Healthcare REIT – 16 April:
“Longer-term, the fundamental demand drivers for elderly care have not changed, nor have the advantages of the group’s ethos and strategy of owning modern, purpose-built care homes which by design segregate residents into groups, promote enhanced infection control, and allow effective isolation, as needed, of residents in their own rooms through the provision of private en-suite wet-rooms.”
Click on the link at the bottom of the page to access the full report.
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