Stock markets in COVID-19 times and technology equities to be discussed during medirectalk

 

MeDirect Bank is organising a third medirectalk investment webinar for 2020 which will be providing an expert overview of the stock markets in view of COVID-19, as well as an analysis of technology equities.

The event will take place online, on 19th November 2020 at 18.00hrs and is free of charge. It follows on the highly successful September’s webinar which focussed on investment opportunities in infrastructure assets and the creation of sustainable income. medirectalk is a series of seminars and webinars organised by MeDirect, featuring several financial experts and asset managers sharing their views on market and investment opportunities.

The upcoming medirectalk is organised by MeDirect Bank Malta, together with Blue Whale Growth Fund. The webinar will start with an overview of the stock markets within the current pandemic crisis and will be followed by the keynote speech of Stephen Yiu, Chief Investment Officer at Blue Whale Capital and Lead Manager of the Blue Whale Growth Fund. Yiu will be giving his views on technology stocks and an overview of Blue Whale’s approach to stock valuation.

Stephen Yiu, co-founded Blue Whale Capital in 2016, with Peter Hargreaves who is a co-founder of Hargreaves Lansdown. Yiu started his career at Hargreaves Lansdown before working with Tim Steer as a co-manager at New Star Asset Management (now Janus Henderson) and Artemis Investment Management. Most recently, Yiu worked under Martin Taylor and Nick Barnes at Nevsky Capital, a global long-short equity hedge fund.

Born in Hong Kong, Yiu grew up in Singapore before completing his education in the UK. A fluent speaker of English, Cantonese and Mandarin, Yiu is truly a global citizen, and with his 15 years of investment experience, is well equipped to manage portfolios in the new global economy.

The Blue Whale Growth Fund is a global equity fund, focussing on large-cap stocks in developed markets. The Fund was launched in September 2017 and since inception it is the best performing fund out of 300 in the IA Global sector. The five-member investment team, led by Yiu, embraces a high conviction, valuation-driven approach to stock selection. At any given point, the fund will be invested into the best 25 to 35 stocks.

The session is an interactive one, and participants will be invited to ask their questions during a 30-minute Q&A session with Stephen Yiu. Questions can be submitted via the online platform during the event or sent in advance to registrations@medirect.com.mt.

In order to register for the medirectalk, as well as to view past events, you may visit here


The information given during this seminar is being provided by Blue Whale Growth Fund. The information contained in this talk is for general information purposes only and is neither intended to provide legal or other professional advice nor does it commit MeDirect Bank (Malta) plc to any obligation whatsoever. The information available during the seminar is not intended to be a suggestion, recommendation or solicitation to buy, hold or sell, any securities and is not guaranteed as to accuracy or completeness. The financial instruments discussed may not be suitable for all investors and investors must make their own informed decisions and seek their own advice regarding the appropriateness of investing in financial instruments or implementing strategies discussed herein.

The financial instruments discussed in this seminar may not be suitable for all investors and investors must make their own informed decisions and seek their own advice regarding the appropriateness of investing in financial instruments or implementing strategies discussed herein.

If you invest in any of the products discussed you may lose some or all of the money you invest. The value of your investment may go down as well as up. A commission or sales fee may be charged at the time of the initial purchase for an investment and may be deducted from the invested amount therefore lowering the size of your investment. Any income you get from this investment may go down as well as up. This product may be affected by changes in currency exchange rate movements thereby affecting your investment return therefrom. The performance figures quoted refer to the past and past performance is not a guarantee of future performance or a reliable guide to future performance. Any decision to invest in a mutual fund should always be based upon the details contained in the Prospectus and Key Investor Information Document (KIID), which may be obtained from MeDirect Bank (Malta) plc.

Morningstar Views: How We Deal With Political Leaders as Investors

Key Takeaways:

 × Our answer to political instability is often simple … manage risks, stay informed and—if in doubt—stay the course.

× That doesn’t mean that offering a steady hand is simple, but we strive to stick to our principled approach to disciplined buying and selling.

× We should not discount the risk of further market turbulence. If this happens, it may create buying opportunities that could add meaningfully to returns in the future.

Political Events and Investing

It should not be controversial to say that this election cycle was unusual. Here are just a few unique factors: COVID-19, economic loss, polarizing political views/policies, related health concerns, and now legal battles. As a result, investors have been quick to link the election result with investment failure or success. That is, we believe in the power of a leader, including their ability to impact business. But the link is not always so straight forward, as we’re about to find out.

Chief among the many problems related to political forecasting is the temptation to react too quickly or with too much confidence at the time of major trigger points. Whether that be the COVID-19 pathway or trade talks with China, it is important to identify the difference between political developments and investment impact.

To do this, we can be grounded by two key questions:

  • Are long-term asset class returns likely to be much different given the unique nature of the election?
  • Should we behave differently, as investors in this environment, to deal with any future uncertainty?

In our mind, the answer is that we are unusual times, where there are a wide range of outcomes; potentially wider than in the past. This is motivating for our team, as we understand our clients need a steady hand.

The Problem Most Investors Face

Perhaps the biggest challenge for those making investment decisions post-election is that you must get two things right: 1) you must guess the outcome of the next political developments, and 2) you must guess the market participant reaction to that outcome. We’d caution that this is extremely difficult way to obtain returns. To illustrate this point, consider expert insights on what markets would do following two recent political events, the election of Donald Trump in 2016 and the approval of the Brexit referendum.

U.S. Election Predictions (U.S. stocks rallied 2.22% on the day after the election and around 9% in the three months following)

We would expect a small global stock market rally if Clinton wins (about 2%) and a large decline if Trump wins (about 10%) —Eric Zitzewitz, professor of economics at Dartmouth College

The S&P 500 will fall by 3% to 5% immediately if Trump is elected —Tobias Levkovich, Citigroup’s chief U.S. equity analyst

If investors are wrong and Trump wins, we should expect a big markdown in expected future earnings for a wide range of stocks—and a likely crash in the broader market —Simon Johnson, professor at MIT Sloan School of Management and former chief economist of the International Monetary Fund

Brexit Referendum Predictions (U.K. stocks fell 3.15% the day after the referendum but gained around 13% in the six months following. Economic growth also continued to rise, albeit slowly, until COVID-19).

A vote to leave would tip our economy into a yearlong recession with at least 500,000 U.K. jobs lost —George Osborne, former chancellor of the exchequer under Prime Minister David Cameron

Leaving Europe would tip the country into recession —David Cameron, former prime minister

Brexit would trigger recession —IMF forecasts for Q3 2016 that predicted -0.3% GDP growth

 

Keep in mind these errant predictions were made from intelligent, determined and informed individuals. They aren’t the first to get short-term predictions wrong and certainly won’t be the last. If nothing else, this help us to remember that political uncertainty is nothing new. As always, we must choose research over reaction and urge individuals to stick to their financial plans made at calmer times.

Political biases aside, it is always easy to build an ugly bear case for the election implications—no matter which scenario you look at—and therefore it is important to balance longer term sources of return that derive primarily from the pessimism of investors with the realization that in the short term, pessimism may increase leading to lower asset prices and consequently better investment opportunities.

It is for this reason that we take a diversified approach when managing money for clients. We don’t go “all in” on a given outcome, because we can mitigate the risks by spreading an investor’s eggs across multiple baskets representing our expectation of superior returns in a variety of outcomes. While some of these scenarios may be directly impacted by the outcome of the election, such as US government bonds, the returns of others will be determined by entirely separate factors, such as Korean equities and European financial companies. 

Last, we leave you with a few key points.

× Remember, the answer to political instability is often simple… manage risks, stay informed and—if in doubt—stay the course.

× Any turbulence in markets may create great opportunities to purchase assets that will add meaningfully to returns in the future. We are not there yet, but we should look at this opportunistically.

 


Morningstar Disclaimers:

Since its original publication, this piece may have been edited to reflect the regulatory requirements of regions outside of the country it was originally published in.

The opinions, information, data, and analyses presented herein do not constitute investment advice; are provided as of the date written; and are subject to change without notice. Every effort has been made to ensure the accuracy of the information provided, but Morningstar makes no warranty, express or implied regarding such information. The information presented herein will be deemed to be superseded by any subsequent versions of this document. Except as otherwise required by law, Morningstar, Inc or its subsidiaries shall not be responsible for any trading decisions, damages or losses resulting from, or related to, the information, data, analyses or opinions or their use. Past performance is not a guide to future returns. The value of investments may go down as well as up and an investor may not get back the amount invested. Reference to any specific security is not a recommendation to buy or sell that security. It is important to note that investments in securities involve risk, including as a result of market and general economic conditions, and will not always be profitable. Indexes are unmanaged and not available for direct investment.

This commentary may contain certain forward-looking statements. We use words such as “expects”, “anticipates”, “believes”, “estimates”, “forecasts”, and similar expressions to identify forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially and/or substantially from any future results, performance or achievements expressed or implied by those projected in the forward-looking statements for any reason.

The Report and its contents are not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would subject Morningstar or its subsidiaries or affiliates to any registration or licensing requirements in such jurisdiction.


MeDirect Disclaimers:

This information has been accurately reproduced, as received from Morningstar, Inc. No information has been omitted which would render the reproduced information inaccurate or misleading. This information is being distributed by MeDirect Bank (Malta) plc to its customers. The information contained in this document is for general information purposes only and is not intended to provide legal or other professional advice nor does it commit MeDirect Bank (Malta) plc to any obligation whatsoever. The information available in this document is not intended to be a suggestion, recommendation or
solicitation to buy, hold or sell, any securities and is not guaranteed as to accuracy or completeness.

The financial instruments discussed in the document may not be suitable for all investors and investors must make their own informed decisions and seek their own advice regarding the appropriateness of investing in financial instruments or implementing strategies discussed herein.

If you invest in this product you may lose some or all of the money you invest. The value of your investment may go down as well as up. A commission or sales fee may be charged at the time of the initial purchase for an investment and may be deducted from the invested amount therefore lowering the size of your investment. Any income you get from this investment may go down as well as up. This product may be affected by changes in currency exchange rate movements thereby affecting your
investment return therefrom. Any decision to invest should always be based upon the details
contained in the Prospectus and Key Investor Information Document (KIID), which may be obtained from MeDirect Bank (Malta)
plc.

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