The ongoing coronavirus pandemic is having a significant impact on corporates, with historical analysis and stress tests against even the extreme economic conditions of 2008 not providing answers. Rupert Silver, Head of Fixed Income, examines the impact on the corporate bond market.
Opportunities in a crisis
Imagining a post-corona world
News channels and publications are full of predictions about the effect of Coronavirus. Both short and long-term predictions tend to be opinionated guesswork, however. Sometimes it's useful to step back and look at some of the established facts to get a sense of directionality, as discussed by Andrew Cormack, Business Development Manager - Investment Solutions.
Changes to 10% Reporting Process
Following guidance from the Financial Conduct Authority (FCA), with effect from 1st April 2020, Credo will implement the following changes to the MiFID II 10% Reporting process:
- Retail Clients will continue to receive initial notifications for a reporting period (a calendar quarter). Subsequent depreciations in the same reporting period that would have previously resulted in a further notification will be suppressed
- All notifications for Professional Clients will cease
- We will continue to provide Financial Intermediaries with all their client notifications
The above changes will remain in place until at least 1st October 2020, at which point the FCA will provide further guidance.
Should you wish to view your portfolio's current holdings and/or performance, this can be done through the secure MyCredo online portal. Alternatively, please do not hesitate to contact Client Services or your Relationship Manager should you have any queries or concerns.
Credo will continue to publish updates regarding market conditions via Portfolio Pulse and our approach to the Coronavirus pandemic via our website.
Credo featured in Investment Week
Alison Norbury, global equity analyst at Credo, was featured in the latest edition of Investment Week's Bull v Bear. She discusses the repercussions of the coronavirus outbreak on global equity markets as well as examining the important characteristics that Credo is looking for in companies during these turbulent times.
Deon Gouws interviewed on Biznews
Following the recent article by Credo Wealth CIO, Deon Gouws, about some of the questionable mathematics and dubious reporting related to the coronavirus, he was interviewed on this same topic by Alec Hogg, founder of financial news site Biznews.
Coronavirus: some questionable mathematics?
Covid-19 is a harrowing disease, and the plight of hospitals around the world and their overworked staff will continue to be overwhelming for some time. Having said that, there has also been a lot of misleading reporting about the pandemic, much of it a consequence of questionable mathematics. Deon Gouws, Chief Investment Officer at Credo Wealth, explains.
Profiting from volatility
Events have been evolving rapidly since we last put pen to paper to write the monthly Spotlight. The international spread of Covid-19, alongside the breakdown of an agreement between OPEC and Russia regarding oil supply restrictions, has spooked markets into some of the worst days since 1987. One of the longest bull markets in history has abruptly...
Time on our hands
One downside of social distancing is the increased temptation for would-be long-term investors to watch the market far more than is healthy - particularly given the dramatic moves in recent weeks. Ainsley To, who heads up the Multi-Asset Portfolio offering at Credo Wealth, provides perspective.
Coronavirus - Business Continuity Plan Update
With the escalation of the Coronavirus pandemic and in line with government advice in both the UK and South Africa, all Credo staff are now working remotely and as such our main and dealing telephone lines have been diverted to the appropriate teams. During this period we would appreciate it if you could use email as the primary method of communication unless you are calling someone on their direct line which are all on divert to their remote working telephone numbers. This will help us to deal with your queries in a more efficient and timely manner.
Please direct your emails to the appropriate team:
Account Opening, Payments*, Book Cost Updates, All other queries
Trade Instructions, Special Instructions (Share Class Conversion, Bed & ISA)
System Access, Group Creation, Data Portal, Training
(*) Please note that we are not currently able to accept cheque deposits to client's accounts and kindly request that clients send money electronically, as per the details received upon account opening.
In the wake of news-flow surrounding the Covid-19 pandemic, the past month has been an extremely challenging time in financial markets. Jarrod Cahn, who heads up the equity team at Credo, provides some perspective with reference to the Best Ideas and Dividend Growth Portfolios.
View from the Thames
Coronavirus fears are gripping the whole world right now and financial markets have been extremely turbulent as a result. What's an investor to do?
This week, Deon Gouws (Chief Investment Officer at Credo Wealth) published a guest column on this topic in leading South African publication Financial Mail.
The paywalled (and slightly edited) version of the article can be viewed on the Financial Mail's own website
Investment Forum 2020
Credo Wealth participated in this year's Investment Forum: the pre-eminent conference for financial advisors in South Africa with more than 1,500 attendees. Deon Gouws (Chief Investment Officer) and Jarrod Cahn (Lead Portfolio Manager of the Credo Global Equity Fund) were both involved as presenters. Due to the Covid-19 risks, the conference took place on a virtual basis in the end, with participants being able to view all sessions online.
Business Day prepared a special wraparound edition of their newspaper specifically for the event; an article by Deon Gouws was included in this.
February in review
Global, developed equity markets made significant losses in February as the outbreak of the coronavirus restricted travel and caused serious disruptions to global supply chains. Confirmed cases in Italy increased fears which led to a large sell-off in global equities towards the end of the month. The S&P 500, FTSE 100 and Euro STOXX 50 were down 8.2%, 9.0% and 8.4% respectively. Against the backdrop of a continued weaker global economy largely due to the outbreak and increased spread of the coronavirus, Brent Crude oil was down 11.9% over the month. In fixed income, bond yields hit record lows with the prospect that Central Banks may need to provide monetary policy support. Notably, US, UK and German 10-year bond yields were all down 0.36%, 0.08% and 0.17% basis points respectively. The pound was down 2.9% against the US dollar and 2.3% against the euro.
Click below for the latest factsheets.
Coronavirus - Business Continuity Plan
Credo is monitoring the Coronavirus COVID-19 outbreak and continue to consider any required revisions to our existing BCP plans in light of the direct threat and evolving implications to our clients, staff and suppliers.
The majority of our staff already has remote working capabilities and we have started a rolling cycle of working from home ahead of any travel limitations or restricted access to our offices. In addition, some functions may be supported from other offices, as appropriate.
We have already had communication with our key service suppliers who are generally taking the same approach as ourselves to ensure continuity of services.
We are taking a prudent and pragmatic approach to this threat and will extend any preventative measures as required.
During this period we will be minimising all but essential face to face meetings utilising telephone or video conferencing instead.
Any further updates will be published here. Watch this space.
Please do not hesitate to contact us should you have any queries.
Tax Year End - Important Information
As we approach the end of the UK tax year, and to assist with your planning, we have listed key information and deadlines that you will need to be aware of in the run up to the end of the current tax year - Friday, 3rd April (last business day).
A testing time
The coronavirus has been causing havoc in financial markets and we've just witnessed the quickest ever correction in share prices over the past few days. Deon Gouws, Chief Investment Officer at Credo Wealth, offers some perspective.
When China sneezes
"When Wall Street sneezes, the rest of the world catches a cold" goes the old saying. What happens when an outbreak of a novel coronavirus shuts down many of China's major cities is a new question. The particularly virulent nature of the virus, combined with the apparently long incubation period, where sufferers can show no symptoms, are posing challenges to those trying to contain the outbreak. After initially trying to suppress the news, the Chinese authorities...
Credo publishes the "Vision 2020" CREDONEWS
Why Microsoft is still attractive
Jarrod Cahn, Manager of the Credo Global Equity Fund, was featured in a recent edition of Citywire Wealth Manager. The article assesses the evolution of Microsoft's business over the last decade, its growth prospects and also why the stock still offers relative value to investors. The strong performance of the Credo Global Equity Fund in 2019 is also highlighted.
Credo Wealth featured in Blue Chip
Credo Wealth is proud to feature in the latest edition of Blue Chip, the official publication of the Financial Planning Institute in South Africa. Not only did Chief Investment Officer, Deon Gouws, contribute a piece about investing in China, but Credo also advertised on the back cover of the magazine.
January in review
Equity markets had an optimistic start to the new year with US President Donald Trump signing a phase one trade deal with China. However, this optimism waned as fears mounted over the outbreak of the coronavirus in Wuhan, China. Asian and European equity markets made significant losses with the Hang Seng, FTSE 100 and Euro STOXX 500 all down 6.7%, 3.4% and 2.6% respectively. Facing the prospect of a weaker global economy due to the coronavirus outbreak, Brent Crude oil was down 12.6% over the month. Safe haven assets performed well over the month with Gold up 4% and the US dollar and Japanese yen both appreciating against pound sterling. Yields on US, UK and German 10-year government bonds fell by 0.41, 0.30 and 0.25 basis points respectively. As an aside, the UK officially exited the EU on 31 January and will aim to negotiate a free trade deal with the EU within the 11-month transition period ending 31 December 2020.
Click below for the latest factsheets.
Credo expands its South African presence with new Global Equity Feeder Fund
Credo Wealth has enhanced its investment offering with the launch of its ZAR-denominated BCI Credo Global Equity Feeder Fund. The fund will invest in the Irish-domiciled Credo Global Equity Fund. Launched in 2017, the Credo Global Equity Fund has reported stellar performance for the 12 months ending 31 December 2019, returning over 32% in US dollar terms.
Brexit, at long last
Following years of political drama, the UK finally left the EU on Friday night (even though a future trade agreement is yet to be finalised). Towards the end of last week, Deon Gouws (Chief Investment Officer of Credo Wealth) discussed developments with three different media outlets in South Africa, namely CNBC Africa, eNCA and RSG Geldsake.
UK Regulatory Hosting event in Johannesburg
Credo hosted an event in its Johannesburg office on 24 January where several of Credo's Financial Intermediary clients were updated on the United Kingdom (UK) market and the use of UK Regulatory Hosting service providers to enable firms to continue to provide services to UK resident investors. Charles van der Merwe (Managing Director, Financial Intermediaries) provided an overview of the UK market, trends in the UK Advisory and Discretionary markets and the benefits of using the services of a UK Regulatory Hosting service provider. The event was well attended as many SA based firms are considering expanding their business outside of SA and following their clients who have emigrated.
New year, new decade, same stock
Starting a new year, or decade for that matter, is a unique opportunity to reflect. One where we both consider the changes that have occurred over the past 10 years, but also try to anticipate what the next period may bring. At the start of 2020, it thus feels like the right time to look back at one of our longest and most successful investments and in particular, one which we also believe will continue to provide an attractive return in the years to come. The world looked very different back at the start of the previous decade. For example...
Seeking long-term success
Credo's Managing Director, Alan Noik, was featured in the most recent Find a Wealth Manager cover story. Find a Wealth Manager is an independent web search portal that "represents over 30 firms, including investment managers and private banks, all with a common theme: a commitment to provide best practice and better-value fees".
Investment Week features Rupert Silver
Rupert Silver, lead Fund Manager of Credo Dynamic Fund, was featured in the latest edition of Investment Week's Bull & Bear. He discusses the challenges presented by asset allocation in the current economic environment. Additionally, he outlines how the fund's flexible approach has helped to increase returns for investors.
December in review
December provided some relief for investors as significant political risks in the UK and between the US and China were avoided. All major equity indices made gains over the month, with the FTSE 100, the S&P 500 and the Euro STOXX 50 all up 2.8%, 3% and 1.2% respectively. US President Donald Trump announced that he plans to sign a 'phase one' trade deal with China on 15 January, which meant that the 15% tariff increases due on 15 December would not be imposed. In the UK, the Conservative Party won a commanding majority in the House of Commons which will allow Boris Johnson to push through a Brexit withdrawal agreement with the EU. Sterling ended the month up 2.6% against the US dollar and up 0.6% against the euro. The yield on UK, US and German 10-year bonds increased by 0.13%, 0.14%, 0.18% respectively.
Click below for the latest factsheets.
What a difference a year makes
Following one of the strongest years in financial markets on record, 2020 began with trouble in the Middle East and rumours of war. What are the implications for investors? Deon Gouws, Chief Investment Officer at Credo Wealth, gives his perspective.
CredoNews featured in Financial Mail
Last month, top South African investment journalist Stephen Cranston referred extensively to the most recent edition of CredoNews in a column for leading publication Financial Mail.
After an introduction in which he mentions how Credo has been prospering as a business, he quotes from a feature article by Deon Gouws, Chief Investment Officer at Credo Wealth, as follows:
"In the latest CredoNews, Gouws writes a note titled "Investing in China: caveat emptor". With lots of pictures of the Forbidden City in the brochure I can imagine he would have loved to change this to "caveat emperor". We seem to be seeing the rebirth of Chinese imperialism, after all".
Gouws points out that just three of the top 10 holdings in the EMQQ, an emerging-markets internet and e-commerce exchange traded fund, are not Chinese, and of these, one, Naspers, is a proxy for Chinese giant Tencent.
But Gouws warns that Naspers doesn't own its shares in Tencent in the sense understood in the West.
It has an exposure through a structure known as a variable interest entity (VIE). The listed entity is wholly owned by Chinese citizens and typically the tech firm's founders. Crucially, it holds the operating licences."
Following some further explanatory remarks, he then focuses on another article from the same edition of CredoNews, as follows:
"Credo analyst Alison Norbury says there are plenty of ways to exploit the China and broader Asian growth story without resorting to VIEs, such as the insurers AIA and Prudential and casino group Las Vegas Sands in Macao."