Jun 15, 2020 | Articles, Global Markets Update
Welcome to the May issue of Odyssey’s Lex Capitis, Odyssey Corporate Advisory’s publication that highlights capital and financial markets developments and its potential implications for you and your business.
Odyssey Corporate Advisory is an independent boutique consultant providing business advisory, investment consultancy, and capital markets project management and coordination services catered for your circumstances and preferences.
It would be an understatement to say that the social unrest in 2019, trade war and Covid-19 presents a challenge for businesses. As we approach the mid-2020, businesses that are considering listing in Hong Kong might find it difficult to meet eligibility requirements unless special dispensation is given by the regulators. So what sort of Hong Kong IPOs should investors expect?
Download the full article here.
Lex Capitis is Odyssey Corporate Advisory’s periodical that highlights capital and financial markets developments and its potential implications for you and your business.
Odyssey Corporate Advisory is an independent boutique consultant providing business advisory, investment consultancy, and capital markets project management and coordination services catered for your circumstances and preferences. Corporate Advisory is a division of Odyssey Asset Management Ltd, a Type 1, 4 and 9 SFC licensed Hong Kong company and subsidiary of the Odyssey Group.
Kuan Yu Oh
Managing Director, Co-Head of Corporate Advisory
Mobile: +852 6971-7989
Email: kuanyu.oh@odysseycapital-group.com
Notice
This publication is for informational purposes only and does not address the circumstances of any particular individual or entity. It does not constitute financial advice and should not be used as such. You should seek a duly licensed professional for financial advice. For more information about please see our Disclaimer.
Jun 10, 2020 | Articles, Global Markets Update
Market View – The Old Normal
Our caution last month proved to be unfounded. The power of the unprecedented stimulus, zero interest rates and the prospect of loosening of lockdown restrictions won the battle against extreme lows in economic activity and the prospect of worst economic data to come. As a result, the World MSCI Index is up 14% since mid-April, and up a whopping 43% since the March trough. The Index now sits at only 6% below the pre-COVID peak. Virtually all risk assets moved up in tandem, including credit. Even oil staged a big rally, rising to USD38 per barrel. The confirmation that the market hadn’t lost all sense occurred last Friday when US unemployment fell to 13.3%, a 1.4% decline from the April figure. This was a particularly large positive shock since some commentators were fearing a number closer to 20%. The other shoe has yet to fall, and those that are waiting, may be in for a long wait. Last week the US interest rate curve steepened 15-25bp for 5-10Y.
Despite market movements, the world is not yet back to normal. The trend in new COVID infections globally is actually still rising. However, the regions that concern the financial markets, namely US and Europe, there the trend is falling, even if the fall is stubbornly slow. Significant restrictions still apply in most countries. The daily new cases in the US still number approximately 19,000, a large quantum.
Source: JHU CSSE
Act 4 in a 5 Act Play
We are now in the 4th Act of the expected 5 Act COVID play for equity markets. The Acts can be characterised as:
Act 1: 3rd week of February. Stocks and other risk assets begin to sell off indiscriminately. The culmination of the first Act was the implementation of the lockdown and social distancing that resulted in the market trough on the 23rd of March.
Act 2: Last week of March. The market realized that there were beneficiaries to the austere policies and we witnessed share prices for online businesses start to surge.
Act 3: 1st week of April. Interest swung to quality businesses that were not beneficiaries of the policies but were partly resistant to the situation and would survive largely intact.
Act 4: Mid-May. The 2nd week of May was when Europe began to loosen lockdown restrictions. By mid-May investors started to support stocks that were heavily affected by COVID policies but were likely to survive as long as the end of the policies remained highly visible. This includes the Banks and Industrial sectors.
Act 5: 3rd – 4th week June? Equity markets to recover their previous peak? Currently, the MSCI World Index is 6% below the pre-COVID peak.
While we have yet to see how Act 5 develops, or whether there is a surprise Act 6 or 7, we find it incredible that it may be possible that in just 4 short months that the equity markets could have plummeted as well as recovered during a time when we are witnessing some of the worst economic data the world has seen since the Great Depression. Indeed, the Global Credit Index (USD corporate bonds) is already up 2% YTD.
Room Left in Laggard Play
While much of the low hanging fruit was picked last week in terms of the under-performing Banks and Industrials, we believe there is still value in the laggard play. Value has been beating Growth in recent weeks, and while this may be a temporary blip to the 10-year Growth out-performance, participating in trend reversals can add meaningfully to performance.
We note that Banks remain 27% below the S&P 500’s peak on the 19th February, compared to Consumer Discretionary, Information Technology, and Healthcare, the sectors that have already regained their previous peaks. Because we are mid-cycle in the laggard recovery, we expect there to be some volatility, but as the global economy slowly climbs out of lockdown, we expect the laggard plays to continue to play catch-up. In Industrials, travel related stocks such as airlines and cruise ships, surged last week. This is likely to remain a highly volatile sub-sector but and may represent a highly sensitive play to the loosening of lockdown restrictions.
Figure 2: Performance of S&P 500 Sectors Since pre-COVID Peak Source: Bloomberg
If you like to receive more information on our portfolios solutions, please contact us here: info@odysseycapital-group.com
Jun 5, 2020 | Articles, Press Releases
Odyssey Group Ltd is pleased to announce the partnership with the Australian Stock Exchange listed, K2 Asset Management (ASX Code: KAM).
Odyssey is constantly seeking ways to drive value for its clients and has been researching solutions to further develop its asset management offering to meet the demand of the firms ever evolving client needs. Odyssey has selected K2 from a large number of possible partners. K2 will assist Odyssey on a number of business lines, including co-managing Odyssey’s in-house Horizon Discretionary Portfolios, bespoke portfolio services and Odyssey’s Satellite trade service, Navigator. Odyssey’s clients in turn will benefit from K2’s experienced team and resources, as well as K2’s consistent alpha that they have generated over the past 21 years.
The following is a summary of K2’s pedigree:
- K2 has a 21 year track record of delivering consistent alpha through multiple economic cycles.
- K2 is an ASX listed Boutique Fund manager which is 68% owned by staff and related parties (ASX Code: KAM)
- K2 operates 5 equity products, including: 2 Australian funds and 3 international funds, along with several other client mandates.
- In September 1999, K2 became one of Australia’s first Long/Short Funds.
- K2 Australian Small Cap Fund (ASX Code: KSM) is the only small cap active listed ETP in the market.
- K2 has 14 staff including 6 dedicated investment professionals.
- K2’s current funds under management is AU$120M.
- K2 has 20 years of investing in Absolute Return fund strategies with a proven track record of persistent alpha generation.
- K2’s focus is on capital preservation with a focus on alpha generation via their proprietary stock selection process.
- Being an absolute manager, K2 have the ability to move to 100% cash at any time.
For further details please visit K2’s website here.
Campbell Neal, Chairman and CEO of K2 commented:
“K2 are pleased to partner with Odyssey as our Asia Pacific partner and to further extend our reach into the Asian region. We look forward to assisting the Odyssey team in managing their client’s investment portfolios and funds”.
Alex Walker, Co-Founder & CEO of the Odyssey Group Ltd added:
“Odyssey is excited about its partnership with such a seasoned and professional firm that is K2. We look forward to our clients benefiting from K2’s 21 years of out performance and strategic insight into the global markets.”
Odyssey’s partnership with K2 highlights sustained interest by Asia Pacific based clients in accessing institutional-quality investment portfolio solutions, that are independent and unconflicted.
The original K2 press release can be accessed here.
Please see the press release as featured in the Australian Financial Review online or download a copy here.
If you would like to learn more, please contact your Odyssey Wealth Manager or contact Jeff Hiew.
