top of page
  • Mixed Authors

Market Commentary - July 2021

· At a headline level global equities delivered a mediocre +0.6% for July – under the surface we saw a lot more turbulence and value destruction, this was not an easy month for Active managers;


1. Market breadth collapsed – with US large cap Tech driving all the gains


2. Small cap underperformed (Russell 2000 -3.6%)


3. China fell through the floor as Beijing’s tech crackdown broadened - the Hang Seng closed the month down 9.9%


4. The US dollar rebounded & UST10YR yield sunk to 1.23%


· 2020 was a good year for most Active managers – with many outperforming by 5~10% given their inherent biases:


1. Smaller cap & off benchmark outperformed


2. Risk outperformed – leverage, beta, cyclicals


3. Emerging markets outperformed


4. Ex-USD outperformed


Fundamentals weren’t a major differentiating factor – central bank policy was clear, uniform, and supportive across the globe, the liquidity wave drove risk outperformance.


· 2021 is becoming a lot tougher – with macro, geopolitics, and fundamentals starting to diverge.


Q2 reporting has been strong and ahead of expectations to date, but macro indicators are starting to dip and peak earnings fears are creeping in.


When the FANGs report huge earnings beats and don’t budge much, it means it’s priced into the market already


· SJM outperformed for the month – the Sogou/Tencent deal got regulatory approval and SOGO/SOHU (both fund positions) were among the few China Tech stocks to end the month in the green (most down 10~20% and China EduTech smashed -75%).


We bought some Tencent (as a trade) at oversold levels following 3 heavy down days last week – we remain cautious on China Tech and think there is more downside as upcoming reporting disappoints.


· The highlight of the month had to be watching Tadej Pogačar win his 2nd Tour de France with ease – It looked as though he was out on a backyard training ride, doing what he loves, a true champion at only 22.


Outlook:

- Markets to remain choppy into Jackson Hole (26~28Aug) ~ with US dollar strength as details on the much anticipated Fed taper are disclosed.


- China to remain weak with regulatory and macro pressures weighing on the market.


- SOGO Tencent deal to close within the next few weeks - value unlock potential for SOHU


- Macau trading at decade lows and below COVID 19 lows - look for a rebound into year end as Macau/HK reopen and we move closer to CNY. Sands the preferred play here with the Londoner and other mass property revamps supporting growth.


Disclaimer

You understand that no content published on this site constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific persons. No blogger, authors, information providers are advising you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.


All content presented is as at the date of publish, and may be superseded by subsequent market events or for other reasons.


The content of the site is not intended to provide tax, legal, insurance or investment advice, you are responsible for such undertakings.


The author, blogger, or content link may or may not have positions in securities or assets mentioned, and does not receive compensation for content provided or have a business relationship.


Stellar James website disclaimer upon entering, applies to all blog and other website content.

1 view0 comments

Recent Posts

See All

Q3 MACROECONOMIC & GEOPOLITICAL OVERVIEW

Disclaimer You understand that no content published on this site constitutes a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for

Comentarios


bottom of page