Monthly management comment
Macro & Politics: ““Slackening cycle ”
We are seeing some signs of deceleration mainly in the European region. For the time being, these changes are minor but the trade war rhetorics from Trump versus China and Europe is not helping the over-all sentiment. German car makers are under pressure as well as Chi-nese techs. The US president wants some changes and it is unlikely he will back off on the idea of implementing some tariffs on imported goods. He also knows that it is difficult for other parties to retaliate as the size of US imports outnumbers any other player around the table. The world will have to live with this protectionism, at least as long as this presidential mandate remains. The scope of these tariffs is so far rather limited, let’s hope they remain so. Some inflation signs have appeared but essentially due to high oil prices.
The differential in central banks strategies remains pushing USD high-er. The Fed will probably have to revise its forthcoming hikes if other central banks remain inactive.
Markets: “Will the earning season save the bull market again? ”
Most indices were more or less flat during the month of June, most Equity markets remaining on negative territory YTD. Quarterly earn-ings are due in the coming weeks and we believe they could reassure and catalyze investors again. Cyclical stocks are suffering and high-flying tech stocks have tumbled, they need to see some support from rising profits. The Chinese market was particularly under pressure with all the trade related issues. We feel the correction is exaggerated and see some opportunities in these corrections.
Investment Themes & Favorite stocks: “Baba, Tomra, Siemens ”
Aulien underperformed in June (-3% mtd and -2.3% ytd) mainly due to corrections in Ali Baba and Tencent and weakening SEK. We feel rather confident that these are temporarily issues, strong earnings and a normalized psyche should bring confidence back. The Fund has sold some core positions (taken profit on Royal Dutch, cut H&M and Inves-tor) in order to buy Tomra (we took the opportunity of the recent correction to add to our position) , Evolution Gaming (we foresee strong results) and Siemens (attractive valuation).
We would also like to allocate in Netflix but feel the valuation is rather rich.