Long Sterling and long Europe have been a safe
journey.
With all the drama about Greece, UK election and FIFA,
long GBP and long UK or Europe stock markets turned out to be a good trade in
first half of 2015.
Eurostoxx 50 is up 14.3% in 2015 as of 22
June. Performers are banks and exporters
in general. Top 10 performers are all up
over 20% year to date. Banks like ING,
Intesa Sanpaolo, SocGen, Unicredit are in the top 10 while Banco Santander,
number 4 from the bottom, is down three percent in price year to date. ING is up 41% year to date as of 22
June. Inditex (Zara fashion chain),
LVMH, Daimler are also in top 10 to reflect the better business activities in
the consumer and luxury segments. Airbus
tops the leader board with 46.7% return year to date as of 22 June as everyone
seems to be flying more these days.
Among the top 10 losers, there are some household names like Siemens
which is up 3.1% and Nokia is down 0.9% year to date. Another interesting contrast is Deutsche
Telekom up 22.0% while Deutsche Post is down 0.2% year to date as of 22
June. More texting than writing is the
norm. Postal service needs to tie up
with eCommerce giants like Amazon to be part of the supply chain.
FTSE 100 is up 4% year to date. Property developers have done well. Long Property Developers stay away from
miners has been the winning theme.
Taylor Wimpey, Barratt Developments, Persimmon are all among top 5
performers this year. Mondi that does
paper packaging ranks second with 36% return in 2015 as of 22 June. Schroders, a fund manager, and Hargreaves
Lansdown, the Independent Financial Advisory Group also give over 22% return to
their shareholders. The resources sector
is a struggle in general. Miners like
Rio Tinto, Glencore and Fresnillo are down 8%.
Anglo American is the worst performing stock in FTSE with 17% negative
return and we still have 6 months to go in 2015. In the oil and gas sector, BG Group is
getting bid from Royal Dutch Shell. BG
Group is up 26.4% and Royal Dutch Shell ‘A’ is down 13%.
In US, there is no simple pattern scanning across
the household names. Netflix, the online
TV/Movie content provider who also produced House of Cards, provided 98% return
and top the chart in Nasdaq 100 stock index.
Electronic Arts, a game provider, Amazon and Starbucks were up 42%, 41%
and 31% year to date respectively. Walt
Disney, Apple, Boeing, Goldman, Nike, JP Morgan, Pfizer are up 10-21% year to
date. Coca-cola, Johnson & Johnson,
Du pont, Travelers, Exxon Mobil, Chevron, Intel, Procter & Gamble, American
Express, and Wal-Mart are the bottom performers among the 30 stocks in Dow
Jones and they are down 4% to 15%. The
worst performing stocks in Nasdaq 100 stock index include Whole Foods Market,
Yahoo, Wynn Resorts are down 18%, 19% and 32% respectively.
Currency wise, Sterling holders have had a steady
and safe ride. GBP against EUR has gone
up from 1.29 to 1.40 as of 19 June, 2015. The high print was 1.42 on 11
March. Since March, GBP versus EUR has
been range bounded between 1.34 and 1.41.
GBP against USD started the year at 1.56, weakened to 1.47 in April,
rebounded to 1.59 on 19 June. GBP
against AUD started 1.91, dipped to 1.84 in January and reached to 2.04. GBP against JPY started at 186.51 and at
175.87 in April, reached 195.26
Gold started 2015 at USD 1184 per onze, peaked on 22
Jan at USD 1302 and zigzagged to USD 1202 on 18 June. Gold prices came off in 2012 from USD 1780
level and have been depressed since then.
2014 rebounded to test USD 1400 level.
One may expect institutional investors may switch to hold gold on the
back of Euro zone crisis and the potential Grexit. Maybe institutional investors rather hold
USD, CHF and GBP then gold. If Grexit
happens, “Cash is King” could be the right strategy.
Crude Oil began the year at USD 53.27 a barrel, slid
to USD 43.66 on 16 March, bounced gradually to USD 60.45 on 18 June. Crude Oil is at USD 60 level now and it is
probably equal chance to see Crude Oil price back to USD 80 before year end or
test USD 40 again. We could see
both. Last June, Crude Oil is above USD
100 a barrel. Who could have guessed
Crude Oil could slide so much.
First half of 2015 should have been a good six
month for UK investors. GBP as a
currency has appreciated against EUR, USD, AUD and JPY since the end of last
year. Stock markets across the world
have performed. Gold is small up couple
of percentage point year to date and oil prices have rebounded more than 10% in
6 months. This is excellent results in
the midst of potential Greece default.
