Our View

A season with politics

Dr Felix Brill, Chief Investment Officer
Reading time: 8 Min
The Corona pandemic is still preoccupying the world. Still, other topics are making it onto the front pages more often: Demonstrations in Belarus, the Brexit negotiations and of course the US presidential election. This autumn promises to be politically charged. Almost like in normal times.

Covid-19 infection rates continue to rise in Europe, especially in Spain. There, the second wave is now a reality, not just a fear. This is hitting the tourism industry hard, because it is destroying hopes of a sustainable recovery. Things are looking much better in other sectors. But the second wave means that many companies are entering the 2021 budgeting phase with a fair amount of uncertainty. Specifically, the owners and managers will ask themselves whether they can still exist after the state support will end and they will have to make staffing and investment decisions accordingly.

This is exacerbated by setbacks in the development of a vaccine. We therefore expect the corona pandemic to occupy us for a long time to come. Nevertheless, other issues have increasingly attracted the attention of the public and the financial markets. For example, the signals from the latest round of Brexit negotiations are worrying and the US presidential election campaign is coming to a head. The autumn could therefore become politically hot and difficult for investors to navigate.

This is exemplified by the recent development of the US Nasdaq index, which tracks technology stocks. After a long period of no holding back, it fell by 11% in just three days. Through our portfolio construction, we have ensured that such price movements have less impact. Overall, we remain cautiously positioned.

Positioning September 2020
Weighting September 2020