Factsheet: November 2020
European markets have recorded a euphoric month of November following the announcement of the Pfizer and Moderna vaccines. The Euro Stoxx 50 gained 18.61%, the CAC 40 17.67% and the Stoxx Europe 600 14.59%; these figures that have last been seen during the Internet bubble of 2000.
Stock market volatility proved significantly stronger in Europe than in the United States, where the sectors hardest hit by the crisis have experienced dramatic technical rebounds. The energy sector topped the list, with a rise of 31%, followed by the banking sector (+30%) and insurance (+25%). No sector was in the red, which is quite a rare phenomenon, and surprisingly, the health sector (+6%) ranked amongst the relative losers.
Markets were torn between the uncertain outcome of the U.S elections and the spectre of re-confinement augured by the second outbreak of Covid- 19 cases leading to overcrowded hospitals.
Markets were torn between the uncertain outcome of the U.S elections and the spectre of re-confinement augured by the second outbreak of Covid- 19 cases leading to overcrowded hospitals.
About our Fund
Since the Fund is not exposed to the sectors that have rebounded the most strongly, it generated a relative performance of +3.20%, which is lower the indices with over the month, but still maintains a comfortable overall outperformance of the indices.
Among our winners, LVMH, which had already resisted the pandemic period very well despite widespread shop closures thanks to its massive online sales, posted a strong performance of +14%, mainly benefiting from an excellent restart in Asia and the prospects of reopening its European shops in December.
Conversely, Christian Hansen, the Danish company specialising in enzymes, fell victim to sector rotation and profit-taking which translated into a decline of 11% over the month.
Only the most defensive stocks held up well: Pernod Ricard gained +2.18%, while Spirax-Sarco, the British specialist in industrial fluid control, continued its momentum (+2.97%) reading new all-time highs in September and October.
Conversely, Euronext, one of Europe's leading stock exchanges, fell by 16.23% after an excellent performance so far this year (+22.13% after this correction). We see here the combined effect of profit-taking by certain investors and doubts about the integration costs relating to the acquisition of Borsa Italiana, which the London Stock Exchange must unravel in order to comply with the European Commission's decisions on competition.
Forecast
After a tense end of the month, markets seem to have partially factored in the effects of the re-confinement and the uncertainties related to the presidential elections. In the U.S, where the wait now is for the Senate elections to be held in early 2021, which will define the room for manoeuvre of the incoming government.
Europe is likely to see sustained liquidity injections in the markets coupled with rates being kept low, which will undoubtedly support the system. Despite extended and tightened containment measures and a GDP that is expected to contract in Q4, PMI indicators are positive and reflect the strong rebound in growth sectors in Q3.
Despite the tensions and macroeconomic concerns, our funds continue to significantly outperform the indices and once again show better resistance in times of distress.
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