Investment

General Markets Comments – March

by Pierre Mouton

March General Markets Comments

Solid, soild as a rock ?

Someone being told in December 2021 that the subsequent month of an invasion of Ukraine by Russia, with its cortege of implications, and notably on commodities, would see markets going up significantly, would have taken this assertion as a joke.
But this is no joke: in a month of extremely high geopolitical risks and possible escalation, soaring commodity prices and inflation expectations on top of surging Covid cases and increased supply-chain issues, markets have decided to walk on the sunny side of the street and post surprisingly good returns.

To wit, the MSCI World added +2.52% and is “only” down 5.53% year to date, while Credit also performed well (the Itraxx Crossover rose +1.25%) while Gold, although on the rise with a positive +1.49% performance in March, did not seem to reflect the extreme fear that most investors perceive.

The main financial victims of this situation are, so far, Emerging Markets, and in particular China: the Chinese CSI300 Index lost 7.84% in March and is now down 13.44% year to date.
With the first 2022 earnings releases looming, all eyes and ears will be focused on outlook and guidance. It is impossible that companies do not mention the geopolitical events’ consequences on their businesses, while they also will have to give a proper view on the implications of record-high commodity prices and supply-chain issues on margins and pricing. We can expect a very cautious tone, barring the obvious beneficiaries of the current mess, namely resources companies essentially.

To add to the unexpected set of observations in March, the upsurge in Government bond yields (US and German 10 years respectively up 51 and 41 bps) did not prevent Growth from outperforming Value, which is quite counterintuitive. The MSCI World Growth rose +3.14%, versus a +1.96% positive return for the MSCI World Value. And finally, the Japanese Yen, often seen as a safe haven currency in troubled times, fell 5.6% against the dollar, mitigating the relative resistance of the Japanese equity market, which is only down 2.41% this year when measured in local currency.

 

 

 

 

 

Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS PARTNERS SA provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data or other financial instruments referred to in this general comment. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request. © NS Partners Group

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Antonio Mira joined NS Partners in 2006 as Group Chief Financial Officer. He heads the corporate functions and is involved in coordinating and implementing the decisions of the Executive Committee.
An experienced bank auditor, Antonio started his career in 1995 with Arthur Andersen, where he worked for some 7 years before joining Ernst & Young in 2002 as a Senior Manager.
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