conference call speak to our investment team april …€¦ · 5/17 april 2020 please refer to the...

CONFERENCE CALL

APRIL 2020

SPEAK TO OUR INVESTMENT TEAM

2/17 APRIL 2020 PLEASE REFER TO THE DISCLAIMER AT THE END OF THIS PRESENTATION.

Luc Filip, Head of Investment

Adrien Pichoud, Chief Economist

SPEAKERS

Fabrice Gorin, Portfolio Manager

Said Tazi, Portfolio Manager

SPEAK TO OUR INVESTMENT TEAM

CONFERENCE CALL


SOCIAL-DISTANCING MEASURES TRIGGER AN UNPRECEDENTED SHOCK TO SERVICE ACTIVITY

MACROECONOMIC UPDATE

PMI ServicesDeveloped Economies

PMI ServicesEmerging Economies

Source: SYZ AM, Factset, Markit PMI


DM CASH RATES ALL DOWN TO ZERO (OR BELOW)EM EASING EVEN IF LESS ROOM TO REALLY CUT


Developed Market Main Central Banks’ Key Rates Emerging Market Main Central Banks’ Key Rates

Easier credit conditions could help soften a short-lived impact


ONCE RATE AT 0, LIQUIDITY INJECTION IS NEXTUSD 3.3TN INJECTED BY CENTRAL BANKS SINCE MID-FEBRUARY


Value of Assets held on the Balance Sheet of the FED, the ECB and the BoJ

Aggregated Balance Sheet size of the FED/ECB/BoJ(USD value & yealy change)


STILL CAUTIOUS, BUT MOVING CLOSER TOWARD A NEUTRAL STANCE ON RISK

ASSET ALLOCATION – OUR CURRENT INVESTMENT VIEWS

The above commentaries are the views of the SYZ Asset Management’s Investment Strategy Group as at 09.04.2020.

MILDDISINCLINATION

DISINCLINATION

STRONG DISINCLINATION

MILDPREFERENCE

PREFERENCE

STRONG PREFERENCE

MILDDISINCLINATION

DISINCLINATION


MILDPREFERENCE

PREFERENCE

STRONG PREFERENCE

GLOBAL RISK – raised at Mild Disinclination DURATION – lowered at Disinclination

• To put this movement in context, bear in mind that, following the last ISG decision to move to Disinclination on March 10th, we thereafter continued to reduce Risk in portfolios before gradually reducing this once strongly defensive position to come back to a level consistent with a Disinclination score.

• From now on, given our central economic scenario (strong negative shock in Q2 but gradual recovery in second half of the year in developed economies), unprecedented monetary and fiscal policy support, and the improvement in valuations that has happened in March, we do not think it is warranted to maintain a very pessimistic stance.

• To be clear, we want to remain on the defensive side, i.e be below the “neutral” level of any portfolio, but we want to be closer to this neutral point as we acknowledge that risks are now two-sided, with both a second leg down and an extension of the rebound in risk assets being possible scenarios.

• All major central banks have now delivered large package of rate cuts and liquidity injection programs that have sent interest rates at or back toward historical lows. Cash rates are now at zero everywhere in the developed world. This has been reflected in the deterioration of safe-haven government bonds in USD, EUR or GBP.

• On top of that, governments are announcing historical fiscal spending plan to contain the impact of the economic lockdown. While we believe central banks will effectively do their best to prevent any long term rate increase, the medium-to-long term impact of such increase in public debt is uncertain.

• As a result, we consider that Duration has little value in portfolios today and that risks are negatively asymmetric in holding long-term interest rate risk.


JANUARY 2020LOW OR NEGATIVE SOVEREIGN YIELDS

BONDS

51%

5% 7%

Sov Non USD0.2

Sov USD1.8

IG2.1

Sub2.7

Hybrid3.3

CoCo4.2

EM Sov Local4.8

EM Sov Hard5.2

HY6.4

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

% of Negative Yield Average Yield


APRIL 2020EVEN LOWER SOVEREIGN RATES BUT HIGHER

CREDIT SPREADS

BONDS

45%

0% 0% 0% 0% 0% 0%3%

0%

Sov Non USD0.2

Sov USD0.5

IG2.4

Sub3.7

EM Sov Local4.2

Hybrid5.0

CoCo5.8

EM Sov Hard8.9

HY11.2

0.0

2.0

4.0

6.0

8.0

10.0

12.0

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

% of Negative Yield Average Yield


CURRENT BBB CORPORATE SPREADS BACK TO ATTRACTIVE LEVELS

BONDS

Source: Bloomberg, as of 17-Apr-2020

BBB spreads increased to 225bps from 125bps : +100bps


INVESTMENT PREFERENCESBONDS

EM LocalNominal GovtEM (Hard Ccy.)

HY CreditReal Govt IG Credit

Change from last month


DISINCLINATIONMILD

DISINCLINATIONMILD

PREFERENCEPREFERENCE

STRONG PREFERENCE

FIXED INCOME


MAJOR INDICES PERFORMANCE 2020EQUITIES

-24%

-27% -27%

-30%-32% -33%

-35%

-38% -39%

-43%

-53%

-60%

-50%

-40%

-30%

-20%

-10%

0%

Consu

mer

Stap

les

Hea

lth C

are

Com

m.S

erv

ices

Info

rmati

on T

ech

nolo

gy

Consu

mer

Dis

cret

ionary

Uti

liti

es

Mat

eria

ls

Rea

l Es

tate

Industr

ials

Financi

als

Ener

gy

MSC

I World -32%

Peak-to-trough sector performance (MSCI World)

Source: Bloomberg, as of 17-Apr-2020


THE BULL CASEEQUITIES

Work resumption rates for large industrial Chinese companies

Source: TS Lombard March 2020 Source: Bloomberg March 2020

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

Mar

-00

Mar

-01

Mar

-02

Mar

-03

Mar

-04

Mar

-05

Mar

-06

Mar

-07

Mar

-08

Mar

-09

Mar

-10

Mar

-11

Mar

-12

Mar

-13

Mar

-14

Mar

-15

Mar

-16

Mar

-17

Mar

-18

Mar

-19

Mar

-20

Difference between S&P500 Earnings yield and US 10 year Treasury yield


-60.00%

-50.00%

-40.00%

-30.00%

-20.00%

-10.00%

0.00%

1 14 27 40 53 66 79 92 105

118

131

144

157

170

183

196

209

222

235

248

261

274

287

300

313

326

339

352

1929 Crash 2008 Financial Crisis Current Crisis

THE BEAR CASEEQUITIES

Peak-to-trough change in global real GDP growth Performance of US Equities from the peak

Source: JP Morgan April 2020

Source: Bloomberg, Dow Jones Ind. for 1929 and S&P 500 for 2008 and 2020

Days


OUR POSITIONINGEQUITIES

13.7%

10.7%

1.7%

9.7%

14.5%

7.3%

25.0%

3.2%

11.8%

1.3%

1.3%

11.9%

8.1%

6.4%

18.8%

9.4%

11.3%

19.1%

5.4%

3.0%

3.1%

3.4%

0% 10% 20% 30%

ConsumerDiscretionary

Consumer Staples

Energy

Financials

Health Care

Industrials

InformationTechnology

Materials

CommunicationServices

Utilities

Real Estate

By sectorMSCI AC World

Portfolio

67.8%

4.7%

13.5%

5.3%

8.7%

54.0%

3.0%

19.0%

10.0%

14.0%

0% 20% 40% 60% 80%

NORTHAMERICA

SWITZERLAND

EUROPE

PACIFIC

EMERGINGMARKETS

By countryMSCI AC World

Portfolio

Source: SYZ PB Balanced USD portfolio, 17/4/2020


YEAR-TO-DATE PERFORMANCE OF OUR CORE EQUITY CERTIFICATE

EQUITIES

Source: Bloomberg as of 17/4/2020

YtD 2019 2018*

SYZ Core Equities -6.9 34.2 -5.4

MSCI World Net Total Ret. -14.0 27.7 -9.1

* s inc e 1/7/18


QUESTIONS & ANSWERSQ&A


This marketing document has been issued by the SYZ Group (hereinafter referred to as " SYZ ”). It is not intended for distribution to or use by individuals or legal entities that are citizens of or residein a state, country or jurisdiction in which applicable laws and regulations prohibit its distribution, publication, issue or use. Users are solely responsible for verifying that they are legally authorisedto consult the information herein.

This material is intended for informational purposes only and should not be construed as an offer or solicitation for the purchase or sale of any financial instrument, or as a contractual document.The information provided herein is not intended to constitute legal, tax, or accounting advice and may not be suitable for all investors. The market valuations, terms, and calculations containedherein are estimates only and are subject to change without notice. The information provided is believed to be reliable; however the SYZ Group does not guarantee its completeness or accuracy. Pastperformance is not an indication of future results.

conference call speak to our investment team april …€¦ · 5/17 april 2020 please refer to the...

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