After the sell off in February and March, the global stock market had a positive run up in April.
While the European and Japanese markets completed a strong bounce, the US and the rest of Asia underperformed.
While the current environment of strong earnings and solid economic growth should be supportive for stocks, we see the new volatility here to stay as geopolitical risk is back and so is inflation risk, with US 10 year Yield hovering around the 3% level.
Source: Bank of Singapore – Monthly Investment Guide, April 2018
It is our view that global Bond markets to underperform, as the Central Banks led by the Fed will continue to raise rates and remove their accommodative monetary policies.
Commodity markets are in a bull market, with Oil trading at 3 years high, while Gold is on the upper band of the recent trading range.
The US Dollar is still in a downtrend for the long run, while a more aggressive Fed in the short run could help the greenbuck bounce from here.
The general consensus was initially for the Fed to hike up to 3 times during 2018, but now we see a real risk of 4 potential hikes, as growth and inflation are picking up, with a quarterly rate rise of 0.25% each quarter.
MARKETS OVERVIEW
Equities – Cautiously Constructive
Equities across the world had a positive April after losses in February and March, we remain positive, but we believe prudence is warranted.
Our forecast for Year End Word stock markets is still a positive return, albeit in single digits.
We still like to be overweight European stocks, as valuations are more attractive and we believe the Euro will keep appreciating versus the Us Dollar.
While Brexit and the Italian political impasse might be negative factors, we think Europe from here will outperform the US market.
Japan had a better month in April as selling pressure from foreign investors eased.
Asia ex-Japan underperformed in April as the market grew concerned about the region’s growth.
Taiwan and Indonesia were the worst, while Singapore and India were the top performers.
Emerging Markets have been struggling with notable examples like Russia and Turkey.
Bonds – Bearish
A rising interest rate environment means most global bond markets are vulnerable and may come udner pressure. Treasury Yields moved up a massive 50 bps towards the end of Q417. Q118 is now hovering now around the important 3% level. It is our view that the US 10yr will reach 3.25% by year end .
If investors need to be positioned in fixed income, we prefer either inflation protected bonds (e.g. TIPS) or high quality corporate bonds with short duration trading at or near face value.
Commodities constructive
Oil prices have rallied for the past 6 months as limits on supplies have been supportive of prices.
Oil demand continues to grow at a steady pace, while the US rig counts has been increasing but at a lower speed than expected. Opec has been very successful in keeping production unchanged. While we think short term we could see a correction in the Oil price, we remain bullish for the long term, being also conscious of developments in Saudi Arabia and Iran.
Gold has sold off from the recent highs after a bounce in the US Dollar and with the stock market stabilising.
We think Gold is still in a price range 1250/1350.
Currencies – Consensus bearish on USD
While the passage of the Tax Cut and the rising bond yields should be positive for the US Dollar, the greenback could be vulnerable in case of a real Trade War.
As rate hikes by the Fed are mostly expected, the market is focused on other Central Banks to follow and change their accommodative stance.
While we believe that the Dollar can strenghted in the short term, we expect the downtrend to carry on in the medium term.
Alternatives – Bullish
We are generally positive on the property markets, with a preference for commercial over residential. Our favoured countries for exposure include Australia, UK, South East Asia, Japan, USA, and Vietnam. Please ask for more information on some of the projects we are currently working on.
We also have a positive outlook on Private Equity as we see better growth opportunities, whilst lower valuations are seen across the industry compared to most stock markets.
BULLISH SECTORS
Energy was the best performer sector in April, as oil price surged to 3 years high, while sectors like Industrials , Consumer Staples and Technology were the underperformers.
Technology stocks suffered as the market grew concerned about a slower than expected smartphones replacement cycle, with semiconductors performing the worse in an otherwise crowded sector. We remain neutral and opportunistic buyers on best names.
We are still positive on Financials after the underperformance in April, as we think the worry about banks suffering a flat yield curve is overblown. We think a renewed push up in interest rates in the US and in the rest of the world, that will benefit the banks. We expect an eventual easing of capital restrictions, which could make it easier to increase dividends and buybacks.
We remain positive on Consumer Discretionary especially in Europe and in Asia, that will benefit from the strong growth of the economy and from sustained improvements in labour markets and consumer confidence.
We like Energy stocks as a defensive play and a possible hedge in case of more geopolitical turmoil for the long run, but we are aware that the market could be toppish in the short term.
HOW WE MANAGE RISK – PORTFOLIO PROTECTION, HEDGING & TAKING PROFITS
As opposed to just going to cash, we prefer alternative strategies such as hedging via options and option writing strategies to smooth out portfolio volatility.
We also actively monitor profits using trailing stop losses with the view of protecting and locking in gains.
PORTFOLIO MANAGEMENT SERVICES
Please let us know if you would like to hear more about our Discretionary Portfolios and how we consistently generate an additional 0.5% to 1.5% per month using our Options Overlay.
CONTACT
We would be more than happy to have an informal chat about these and the other services we offer as well as the current opportunities we are looking at.
The Flying Winemaker lands in New Zealand with the acquisition of Gladstone Vineyard by Odyssey Capital Group
11 May 2018
Leading Wairarapa wine producer Gladstone Vineyard is entering a new chapter as the business is set to be acquired by Odyssey Capital Group in partnership with Flying Winemaker Holdings Limited.
Odyssey Capital Group is Asia’s leading independent alternative asset manager that provides differentiated and bespoke investment solutions across multiple assets classes, one of which is attractive alcohol opportunities in the Asia-Pacific region. The Gladstone Vineyard purchase adds to the group’s stable of portfolio companies that the company offers via its sister business, Odyssey Asset Management Ltd, a SFC Type 1, 4 and 9 licensed company.
The Flying Winemaker is a multi-faceted Australasian wine producer founded by award winning winemaker Eddie McDougall.
Under the new ownership, which is subject to New Zealand Overseas Investment Office approval, there is opportunity for significant growth in production, a realignment of the brands under the Flying Winemaker’s established partner network and a priority focus on Asia-Pacific distribution.
Christine Kernohan, the current proprietor of Gladstone Vineyard, will stay on as General Manager/Chief Winemaker, along with key Gladstone staff, who will continue to provide significant input into running the vineyard, in conjunction with The Flying Winemaker.
Daniel Vovil says “Odyssey is pleased to be working with its long-term client, The Flying Winemaker and to have the opportunity to acquire such an attractive asset with a great team, that is Gladstone Vineyard. The acquisition of Gladstone Vineyard further adds to Odyssey’s vineyard and alcohol portfolio in the Asia-Pacific region and demonstrates our commitment to the industry and the region.”
Christine Kernohan says she is pleased negotiations with Odyssey and Eddie have reached this outcome.
“Having expanded our vineyards from an annual production of 1,000 cases to around 10,000 cases in the past 20 years, we are pleased that Odyssey and The Flying Winemaker see the huge potential of Gladstone Vineyard wines on the world stage.”
Eddie McDougall says he is looking forward to building on Gladstone Vineyard’s successes.
“It has been a long and detailed process when it came to selecting the right vineyard and region in New Zealand that I felt was going to offer wine drinkers the next big thing. It was important to me that we become custodians of an existing vineyard that showed great promise if it could utilise our winemaking expertise and branded ecosytem. I recognise world-class winemaking businesses are not built in a day and having the chance to take over Gladstone Vineyard with more than 30 years on the books makes this a very special opportunity. My team and I are incredibly excited to become the new custodians of the vineyard as we continue to build on the foundations laid by the Kernohan family and their team.”
The Flying Winemaker, regarded as Australasia’s leading voice in wine, was born on the streets of Hong Kong in 2010. The brand originated as a talisman for those determined to change the way wine is perceived, enjoyed and shared in Asia. Led by founder and winemaker Eddie McDougall, the company continues to drive a vino revolution in a region where wine still has a very white tablecloth perception.
With a longstanding commitment to making award-winning wines, running a comprehensive online store, hosting guerilla and educational wine tastings (Rosé Revolution), producing modern marketing and media content (Asian Wine Review), The Flying Winemaker leads the charge as the world’s most exciting wine brand.
The launch of a Television Series on Discovery Channel and Netflix brought The Flying Winemaker name into over 472 Million households across the globe. The result of this worldwide exposure has led to partnerships with some of the world’s most dynamic companies, such as Microsoft, Sky Team Alliance, MasterCard and Lan Kwai Fong Group.
The Flying Winemaker’s ongoing commitment to winemaking has now evolved to offer a fully comprehensive grape to glass service for new wineries in emerging wine regions. With a team of avid winemakers, experienced marketers and former luxury hospitality professionals, The Flying Winemaker crew is ready to bring anyone’s dream to make and sell great wines to life.
Eddie McDougall is the award-winning winemaker, chairman of the Asian Wine Review, wine critic, columnist and TV personality behind The Flying Winemaker, one of Asia-Pacific’s most dynamic wine brands.
With over 15 years of winemaking experience, Eddie has worked with some of the most influential wineries in the New and Old World including the likes of Vietti, Mas de Daumas Gassac, Giant Steps, Deep Woods Estate and Silver Heights. In 2007, the young winemaker took his first step as a young entrepreneur, creating his Australian wine brand, Eddie McDougall Wines. Eddie’s wine brand has been awarded a 4.5 star rating from James Halliday whilst his collection of wines continue to score 90+ points from international critics.
About Gladstone Vineyard
Gladstone Vineyard is a family business with an international reputation for distinctive, high quality wines of finesse and complexity. Established in 1986, Gladstone Vineyard was the first of a cluster of boutique wineries to emerge on the old riverbed of the Ruamahanga River, in New Zealand’s Wairarapa wine region. Today, the winery produces around 120,000 bottles of wine annually, concentrating on its award winning Pinot Noir, Sauvignon Blanc and Pinot Gris.
Gladstone Vineyard currently exports around50 percent of its production, with markets including Australia, the United Kingdom, Norway, the United States, Canada, Japan, Singapore, and the Philippines.
About Odyssey Capital Group
Odyssey Capital Group is Asia’s leading independent Alternative Asset Manager that provides differentiated and bespoke investment solutions across multiple assets classes to its clients. The company’s divisions include: Asset Management, Wealth Management, Hedge Funds and Real Estate.
The Firm’s primary focus is to seek out undervalued investment opportunities to co-invest with its clients.
The Odyssey team comprises 28 experienced executives, asset managers, lawyers, private bankers, trust & tax planning specialists and experienced investors with over 400 years of combined financial and operational experience across Asia Pacific, Europe and North America.
This experience allows the Odyssey team to provide a broad regional industry expertise, insight into global macro and geopolitical trends, and a powerful network of global relationships.
When clients partner with the Odyssey Group of companies, they benefit from the breadth and depth of expertise with the entire firm working in unison to achieve a targeted outcome.
Our innovative approach allows us to generate attractive investment returns within the context of a prudent and long term horizon.
We aim to only employ the highest quality people as partners in our business, while pursuing the highest standards, and aligning our interests with those of our investment partners. It is our goal to be the “trusted partner” for our clients’ needs.
Source: Bank of Singapore – Monthly Investment Guide, April 2018
