The UK Government confirmed a local lockdown in Leicester on Monday, marking the first such lockdown in the UK in the wake of rising cases in the area. The lockdown comes amidst rising cases in a number of US states including California, where the number of cases has risen by nearly 50% in the last two weeks. Both of these examples represent the second wave fears governments have tried to avoid as they reopen economies.
This week, China introduced a new national security law for Hong Kong. It introduces new crimes with severe penalties and allows mainland security personnel to legally operate in Hong Kong with impunity. Trials can be held in secret and without a jury; judges can be handpicked by Hong Kong’s chief executive who is answerable directly to Beijing. Arrests were made on Wednesday under a new anti-protest law.
The stock market continues to push higher, fuelled by perennial hopes of a vaccine and supported by the coordinated efforts of governments and central banks. Corporate news flow is due to pick up in the next few weeks, giving investors some deeper insight into exactly how individual businesses have performed over the last few weeks.
With equity markets having recovered strongly from the panicked lows of March, valuations have climbed well out of the troughs and have spent the last few weeks pushing progressively upwards.
Against a backdrop of low (in some cases negative) yielding government bonds forcing investors to look elsewhere for returns, equity markets continue to be pumped with capital. We are now in a position where forward-looking returns are likely to be modest given current valuation levels and so careful attention needs to be paid to company fundamentals.
The rising tide of the last few weeks has lifted most boats. Now that the swell is subsiding, it’s increasingly important to pick the stocks which can continue to rise of their own accord, even on still waters.
Earnings season is fast approaching with companies preparing to update markets on recent performance. It’s very possible that many will report results which do not quite match the optimistically V-shaped stock market recovery.
As news starts to emerge, we will continue to conduct the diligent analysis necessary to look for those companies which have, and can continue to, benefit from the gradual recovery economies are experiencing.
Sanlam Virtual Work Experience
In April and May, we held a number of digital events designed to offer some respite from the lockdown. A mainstay of these events was a series of webinars offering careers advice to those soon to start their working lives. The attendees were children of our clients and connections, and the programme was particularly well-received.
Although lockdown measures are gradually being lifted, we are aware that the younger generation have concerns about starting their careers in such a challenging job market with many work experiences and internships cancelled. To provide support to our clients, referrers and connections, we have created an online Virtual Work Experience Week from 20th–23rd July.
The programme is for 18-23 year olds and will offer a variety of sessions with distinguished business leaders, entrepreneurs and educators, also allowing participants to embark on a team project throughout the course of the week – making it a genuine work experience opportunity.
Please see our flyer containing further information including details on how to apply to the programme. Please note that participants must be aged at least 18 on 20th July for legal & compliance reasons.
All investment views are presented for information only and are not a personal recommendation to buy or sell. Past performance is not a reliable indicator of future returns, investing involves risk and the value of investments, and the income from them, may fall as well as rise and are not guaranteed. Investors may not get back the original amount invested.