Investment

October General Markets Comments

by Pierre Mouton

October General Markets Comments

“Bitter Sweet Symphony” – The Verve, 1997.

Markets have been playing us this bitter sweet symphony this year, to paraphrase The Verve in their 1997 hit.

Sweet to a certain extent, as shown by the +6.4% return for the MSCI World year to date or the +9.2% for the S&P500 or, for the prescient or lucky ones having heavy exposure to the Nasdaq, a fantastic and very sweet +31.7%. These few numbers also highlight the massive polarization in equities this year; the famous Magnificent Seven explain almost the entire performance of these 3 indices, which leaves a bitter taste for many market participants who do not witness these flattering returns in their portfolios.

Bitter for long term USD bond holders, who have seen the value of their capital shrink despite expectations for a slowdown (if not a recession) in the economy that would normally favour this type of investments, not to mention their safe haven attributes in troubled geopolitical times like the ones we’re living through.

Bitter for those having placed bets on the famous China reopening, which has morphed into a money-losing trade (-7.7% for the CSI 300 year to date), and for those who logically expected Value to catch up versus Growth in a rising interest rates environment (the MSCI World Value is now down 3.6% year to date versus +17.2% for its Growth counterpart).

The MSCI World lost 3% in October, the S&P 500 2.2%, the Stoxx 600 3.7%, the Topix 3% and the MSCI Emerging Markets 3.9%. US 10 year yields rose by 36 bps, while German Bunds and Italian BTPs yields stayed more or less flat. The Israel-Palestine tinderbox had its effect on Gold (up 7.3%), but Oil markets ensnared market participants with an eye-popping 10.8% fall for the WTI, quite a flabbergasting move at a moment of severe tensions in the Middle East. Among other things, credit nudged down (-0,27% for the Itraxx Crossover), and the Japanese Yen further slumped versus the greenback (-1.4%) and is now down 15.6% year to date.

 

 

 

 

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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