The first quarter of 2019 was a positive one for global equities, as markets bounced back from the losses registered towards the end of 2018. The positive performance was driven by a more expansionary stance being taken by various central banks, as well as the prospects of improving trade relations between the US and China.

As a result, US equities posted gains, as did equities in Emerging Markets, led by China. The Eurozone was characterized by worries over economic growth, however, equities rose as the European Central Bank reacted by loosening its monetary policy. Similarly, UK equities traded higher, in spite of yet another quarter dominated by political uncertainty surrounding Brexit. Elsewhere, equities in Japan underperformed, but still traded in positive territory.

Bond markets registered an interesting performance, as US 10-year Treasury yields fell drastically, to even lower levels than the three-month Treasury yields. This can be an indicator of increased caution among investors. Despite the fact that global growth remains in expansion territory, the outlook has deteriorated, and activity levels have likely passed their peak.

 

EUROZONE

In the Eurozone, equities kicked off 2019 strongly, backed by a change in the European Central Bank’s (ECB) monetary policy.  The ECB had previously announced that it would keep rates on hold at least until next summer, but it has now gone on to extend this period of unchanged interest rates until the end of 2019. The slowdown in pace at which the ECB is tightening its monetary policy, is a reaction to the latest economic data, showing that the Eurozone economy grew by an unimpressive 0.2% in the last quarter of 2018. This has led the ECB to revise downwards its outlook for the Eurozone economy. During the last three months of 2018, the German economy failed to register growth, while the Italian economy shrank for the second quarter in a row, thus officially slipping into recession.  On a more positive note, European investors seemed to be more optimistic with regards to the US-China trade conflict.

The stock market sectors had mixed returns in the first quarter of 2019. While there were cyclical sectors such as industrials and information technology which performed well, there were also signs of investor flight to safety, as some defensive sectors like consumer staples and real estate also posted gains.

The banking industry was initially optimistic about reports of a new ECB programme aimed at providing cheap financing to banks, in a bid to stimulate the economy. However, when details emerged of the conditions for such lending, many argued that the new terms are less favourable than previous similar ECB programmes. Another negative aspect for banks is that the extension of the low interest environment will continue to hurt net interest margins, and ultimately, banks’ profitability.

 

UNITED STATES

Equities in the US started the year strongly as the US Federal Reserve decided to postpone its planned interest rate hikes in order to compensate for weak economic data for the fourth quarter of 2018. In line with the ECB, the US Fed revised downwards its projections for growth and inflation. Signs of a potential resolution with regards to the US-China trade war also sparked optimism among investors. On a negative note, markets were impacted by a disagreement between the US congress and President Donald Trump on government funding, which led to the longest US government shutdown in history.

The best performing sector was the IT sector, which recovered strongly from the losses recorded in 2018. At the other end of the spectrum, the healthcare sector underperformed due to uncertainty over regulatory changes, while the financial sector reacted negatively to the Fed’s adjusted plans for rate hikes, which can hinder profitability.

As the quarter progressed, investors seemed to take a more cautious approach, wary of the potential deeper implications which the economic slowdown might have. Long term treasury yields fell to lower levels than short term yields, resulting in an inverted yield curve. This is caused by an increased demand in longer-term fixed-income securities, a sign that has historically preceded recessions.

 

UNITED KINGDOM

In the United Kingdom, equities managed to rebound from the negative end to 2018. The recovery was led by companies with perceived strong and stable earnings, in view of a backdrop of global uncertainty. Some of the best performing equities were in the technology sector, as well as certain parts of the consumer goods sector. Another positive factor on UK equities, was the extension of the Brexit deadline beyond March. The extension has increased the possibility that the UK can come up with an acceptable agreement with the EU to avoid crashing out of the bloc without a deal. Various undervalued, domestically-focused areas bounced back strongly following the news of the extension.

Economic data for the last quarter of 2018 was somewhat negative, as the economy grew at a rate of 0.2%, down from 0.7% in Q3. One of the main reasons for this is likely to be the uncertainty surrounding Brexit, which is negatively impacting business investment.

 

EMERGING ECONOMIES

Emerging markets had a positive quarter, however, they still underperformed the World Index. Gains were led by China, backed by government support for the domestic economy, as well as the decision by the US to suspend tariff hikes on $200 billion of Chinese goods. Countries which are net exporters of oil, such as Russia and Colombia performed well, driven by higher crude oil prices. On the other hand, Qatar was the weakest performer, while Turkish equities continued to decline as a result of the country’s ongoing economic problems.

 

 

MALTA

Local equities also had a strong first quarter in 2019, as the MSE Equity Total Return Index climbed by a solid 5.01%. The list of gainers was led by International Hotel Investments plc, GO plc, MAPFRE Middlesea plc and Malta International Airport plc, all of which posted double digit price hikes. On the other hand, no less than 11 equities were a drag to the index, led by MaltaPost plc which lost 20.89% in value. In February, BMIT Technologies plc was admitted to listing on the Malta Stock Exchange. The equity, closed the quarter 6.12% over its issue price, at €0.52.

In the sovereign debt market, yields were significantly lower as the MSE Malta Government Stocks Total Return Index increased by a substantial 3.31% – mirroring the broader European Government debt market. The corporate debt market followed suit, with the MSE Corporate Bonds Total Return Index posting a more modest gain of 0.45%.

 

WHAT LIES AHEAD

The mixed economic data and the willingness of central banks in developed countries to keep rates low is a positive for markets. During periods of easing monetary policy and increasing governments spending, investors embrace both equities and bonds. This time it is no different. We believe long term investors should take advantage of the current economic and market environment through a diversified portfolio of growth and income assets.

With this in mind we continue to manage our actively managed Merill strategies in a way to take advantage of the current favourable market environment. At the same time we held most of our defensive positions, in order to better protect the value of the portfolios in a down market. In addition, various economies are growing at different rates and hence the need to diversify your portfolio globally, avoiding high exposure to a single country or continent. As a result, we have recently launched a Sterling (GBP) hedged share class of our popular Merill High Income Fund. This fund was launched in order to help investors, who hold investments which are highly UK focused, to diversify their portfolios globally. Following the successful launch of this new share class, the assets managed by Merill SICAV plc has surpassed the €84m mark.

Finally, we encourage you to schedule a meeting with one of our investment advisors, to assess your current investment objective and recommend a portfolio strategy suitable for your needs and in accordance with your risk profile.

This round-up is not intended to constitute an offer or agreement to buy or sell,and investments referred to in this document may not be suitable for every investor. The companyorany connected company, their clients, officers and employees are likely to have an interest in securities mentioned in this round-up. Past performance is no guide to future performance and the value of investments may fall as well as rise.

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L-EWWEL KWART TAL-2019 – ĦARSA ĠENERALI LEJN L-INVESTIMENTI GLOBALI

 

L-ewwel kwart tal-2019 kien wieħed pożittiv għall-ishma globali, hekk kif is-swieq irkupraw mit-telf irreġistrat lejn l-aħħar tal-2018. Il-prestazzjoni pożittiva irriżultat mill-pożizzjoni ta’ aktar espansjoni li ħadu diversi banek ċentrali, kif ukoll mill-prospetti ta’ titjib fir-relazzjonijiet kummerċjali bejn l-Istati Uniti u ċ-Ċina.

Bħala riżultat, l-ishma tal-Istati Uniti kellhom gwadann, bħalma kellhom ukoll l-ishma fis-Swieq Emerġenti, immexxija miċ-Ċina. Iż-Żona tal-Euro kienet ikkaratterizzata minn tħassib dwar it-tkabbir ekonomiku, madankollu, l-ishma żiedu fil-valur hekk kif il-Bank Ċentrali Ewropew irreaġixxa billi llaxka l-politika monetarja tiegħu. Bl-istess mod, l-ishma tar-Renju Unit ġew innegozjati f’livelli ogħla, minkejja tliet xhur oħra ddominati minn inċertezza politika dwar il-Brexit. Mill-bqija, l-ishma fil-Ġappun ma kellhomx prestazzjoni tajba, imma xorta ġew innegozjati f’territorju pożittiv.

Is-swieq tal-bonds irreġistraw prestazzjoni interessanti, hekk kif ir-rendimenti fuq il-US 10-year Treasury Bonds waqgħu b’mod drastiku, f’livelli anke aktar baxxi mir-rendimenti tal-US 3-month Treasury Bonds. Dan jista’ jkun indikatur ta’ żieda fil-kawtela fost l-investituri. Minkejja l-fatt li t-tkabbir globali jibqa’ f’territorju ta’ espansjoni, il-prospettiva ddeterjorat, u l-livelli tal-attività aktarx li għaddew mill-ogħla livelli tagħhom.

 

IŻ-ŻONA TAL-EURO

Fiż-Żona tal-Euro, l-ishma bdew l-2019 b’avvanz b’saħħtu, sostnuti minn bidla fil-politika monetarja tal-Bank Ċentrali Ewropew (BĊE). Il-BĊE qabel kien ħabbar li se jżomm ir-rati fl-istess livelli mill-inqas sas-sajf li ġej, imma issa kompla jestendi dan il-perjodu ta’ rati tal-imgħax mhux mibdula sal-aħħar tal-2019. It-tnaqqis fir-ritmu li bih il-BĊE qed jissikka l-politika monetarja tiegħu, huwa reazzjoni għall-aħħar dejta ekonomika, li turi li l-ekonomija taż-Żona tal-Euro kibret bil-perċentwal mhux impressjonanti ta’ 0.2 % fl-aħħar kwart tal-2018. Dan wassal lill-BĊE biex jirrevedi ’l isfel il-prospetti tiegħu għall-ekonomija taż-Żona tal-Euro. Matul l-aħħar tliet xhur tal-2018, l-ekonomija Ġermaniża naqset milli tirreġistra tkabbir, filwaqt li l-ekonomija Taljana ċkienet għat-tieni kwart konsekuttiv, u b’hekk uffiċjalment daħlet f’reċessjoni. Fuq nota aktar pożittiva, l-investituri Ewropej dehru li huma aktar ottimisti fir-rigward tal-kunflitt kummerċjali bejn l-Istati Uniti u ċ-Ċina.

Is-setturi tas-suq tal-ishma kellhom qligħ varjatfl-ewwel kwart tal-2019. Filwaqt li kien hemm setturi ċikliċi bħal dawk industrijali u tat-teknoloġija tal-informatika li kellhom prestazzjoni tajba, kien hemm ukoll sinjali ta’ investituri li fittxew setturi aktar sikuri, hekk kif xi setturi difensivi bħal tal-prodotti bażiċi tal-konsumaturi u tal-proprjetà immobbli wkoll kellhom gwadann.

L-industrija bankarja inizjalment kienet ottimista dwar rapporti ta’ programm ġdid tal-BĊE mmirat biex jipprovdi finanzjament irħis lill-banek, fi sforz biex jistimula l-ekonomija. Madankollu, meta ħarġu d-dettalji tal-kundizzjonijiet għal self bħal dan, ħafna argumentaw li t-termini l-ġodda huma inqas favorevoli minn programmi preċedenti simili tal-BĊE. Aspett negattiv ieħor għall-banek huwa li l-estensjoni tal-perjoduta’ imgħax baxx se tkompli tagħmel ħsara lill-profitabbiltà tal-banek.

 

L-ISTATI UNITI

L-ishma fl-Istati Uniti bdew is-sena fuq nota ferm tajba wkollhekk kif il-Federal Reserve tal-Istati Uniti ddeċidiet li tipposponi ż-żidiet ippjanati tagħha fir-rati tal-imgħax sabiex tikkumpensa għal dejta ekonomika dgħajfa għar-raba’ kwart tal-2018. F’konformità mal-BĊE, il-US Fed irrevediet ’l isfel il-projezzjonijiet tagħha għat-tkabbir u l-inflazzjoni. Is-sinjali ta’ riżoluzzjoni potenzjali fir-rigward tal-gwerra kummerċjali bejn l-Istati Uniti u ċ-Ċina qanqlu wkoll ottimiżmu fost l-investituri. Fuq nota negattiva, is-swieq ġew affettwati min-nuqqas ta’ qbil bejn il-Kungress tal-Istati Uniti u l-President Donald Trump dwar il-finanzjament tal-gvern, li wassal għall-itwal shutdown tal-gvern Amerikan fl-istorja.

Is-settur bl-aqwa rendiment kien is-settur tat-teknoloġija, li rkupra bil-qawwa mit-telf irreġistrat fl-2018. Fit-tarf l-ieħor tal-ispettru, is-settur tal-kura tas-saħħa ma kellux prestazzjoni tajba minħabba inċertezza dwar bidliet regolatorji, filwaqt li s-settur finanzjarju rreaġixxa b’mod negattiv għall-pjanijiet aġġustati tal-Fed għal żidiet fir-rati, li jistgħu jfixklu l-profitabbiltà.

Hekk kif beda għaddej l-ewwel kwart tas-sena, l-investituri dehru li qed ikunuaktar kawta, imħassba dwar l-implikazzjonijiet potenzjali aktar profondi li jista’ jkollu t-tnaqqis ekonomiku. Ir-rendimenti tat-teżor fit-tul waqgħu għal livelli aktar baxxi mir-rendimenti fuq żmien qasir, kkawżat minn żieda fid-domanda għal titoli ta’ dħul fiss għal żmien itwal.  Storikament, dan kien iseħħ qabel ir-reċessjonijiet.

 

IR-RENJU UNIT

Fir-Renju Unit, l-ishma rnexxielhom jirkupraw mill-għeluq negattiv tal-2018. L-irkupru kien immexxi minn kumpaniji bi qligħ meqjus bħala b’saħħtu u stabbli fl-isfond tal-inċertezza globali. Uħud mill-ishma bl-aqwa prestazzjoni kienu fis-settur tat-teknoloġija, kif ukoll f’ċerti partijiet tas-settur tal-prodotti għall-konsumatur. Fattur ieħor pożittiv għall-ishma tar-Renju Unit, kien l-estensjoni għall-Brexit wara Marzu. L-estensjoni żiedet il-possibbiltà li r-Renju Unit jista’ jasal għal ftehim aċċettabbli mal-UE biex jevita l-ħruġ mill-Unjoni Ewropea mingħajr ftehim. Diversi oqsma sottovalutati, iffukati fuq is-settur domestiku rkupraw b’mod qawwi wara l-aħbar tal-estensjoni.

Id-dejta ekonomika għall-aħħar kwart tal-2018 kienet pjuttost negattiva, hekk kif l-ekonomija kibret b’rata ta’ 0.2 %, ’l isfel minn 0.7 % li rajna fit-tielet kwart tal-2018. Waħda mir-raġunijiet prinċipali għal dan aktarx li hija l-inċertezza dwar il-Brexit, li qed tolqot b’mod negattiv l-investiment tan-negozji.

 

L-EKONOMIJI EMERĠENTI

Is-swieq emerġenti kellhom l-ewwel kwart tas-sena pożittiv, madankollu, xorta kellhom prestazzjoni agħar minn dik tal-World Index. Il-qligħ kien immexxi miċ-Ċina, sostnuta mill-appoġġ tal-gvern għall-ekonomija domestika, kif ukoll mid-deċiżjoni tal-Istati Uniti li tissospendi ż-żidiet fit-tariffi fuq $ 200 biljun ta’ prodotti Ċiniżi. Il-pajjiżi li huma esportaturi netti taż-żejt, bħar-Russja u l-Kolombja marru tajjeb, xprunati minn prezzijiet ogħla taż-żejt mhux raffinat. Min-naħa l-oħra, il-Qatar kellu l-aktar prestazzjoni dgħajfa, filwaqt li l-ishma Torok komplew jonqsu fil-valur minħabba l-problemi ekonomiċi li għaddejjin fil-pajjiż.

 

MALTA

L-ishma lokali wkoll kellhom l-ewwel kwart tas-sena b’saħħtu fl-2019, hekk kif l-MSE Equity Total Return Index żdied bil-perċentwal b’saħħtu ta’ 5.01 %. Fuq quddiem tal-lista ta’ dawk li għamlu gwadann rajna l-ishma ta’ International Hotel Investments plc, GO plc, MAPFRE Middlesea plc u Malta International Airport plc, li kollha kemm huma wrew żidiet fil-prezz b’żewġ ċifri. Min-naħa l-oħra, mhux inqas minn 11-il sehem kellhom impatt negattiv fuq l-indiċi, immexxija mill-ishma ta’ MaltaPost plc li tilfu 20.89 % mill-valur tagħhom. Fi Frar, BMIT Technologies plc ġew ammessi għall-ewwel darba fuq il-Borża ta’ Malta. L-ishma għalqu dan il-kwart tas-sena b’żieda ta’ 6.12 % fuq il-prezz tal-ħruġ tagħhom, fil-livell ta’ € 0.52.

Fis-suq tad-dejn sovran, ir-rendimenti kienu aktar baxxi b’mod sinifikanti hekk kif l-MSE Malta Government Stocks Total Return Index żdied bl-ammont sostanzjali ta’ 3.31 % – li jirrifletti s-suq usa’ tad-dejn tal-Gvern Ewropew. Is-suq tad-dejn korporattiv segwa, bl-MSE Corporate Bonds Total Return Index jirreġistra qligħ aktar modest ta’ 0.45 %.

 

ĦARSA LEJN IL-ĠEJJIENI

Id-dejta ekonomika mħallta u r-rieda tal-banek ċentrali fil-pajjiżi żviluppati li jżommu r-rati baxxi huma pożittivi għas-swieq. Matul perjodi ta’ llaxkar tal-politika monetarja u ta’ żieda fl-infiq tal-gvernijiet, l-investituri jħaddnu kemm l-ishma kif ukoll il-bonds. Din id-darba mhijiex differenti. Aħna nemmnu li l-investituri fit-tul għandhom jieħdu vantaġġ mill-ambjent ekonomiku u tas-suq attwali permezz ta’ portafoll diversifikat ta’ assi tat-tkabbir u tad-dħul.

F’dan l-isfond aħna nkomplu nimmaniġġjaw b’mod attiv l-istrateġiji tal-Merill SICAV plc b’tali mod li nieħdu vantaġġ mill-ambjent tas-suq favorevoli attwali. Fl-istess ħin żammejna ħafna mill-pożizzjonijiet difensivi tagħna, sabiex nipproteġu aħjar il-valur tal-portafolli f’suq li jkun għaddej minn żmien negattiv. Barra minn hekk, diversi ekonomiji qed jikbru b’rati differenti u għalhekk il-ħtieġa li tiddiversifika l-portafoll tiegħek globalment, billi tevita esponiment għoli għal pajjiż jew kontinent wieħed. Bħala riżultat, dan l-aħħar nedejna klassi ta’ ishma ħħeġġjata kontra l-isterlina (GBP) tal-fond popolari tagħna, il-Merill High Income Fund. Dan il-fond tnieda sabiex jgħin lill-investituri, li għandhom investimenti li huma ffukati ħafna fir-Renju Unit, biex jiddiversifikaw il-portafolli tagħhom globalment. Wara t-tnedija b’suċċess ta’ din il-klassi l-ġdida ta’ ishma, l-assi mħaddma mill-Merill SICAV plc issa qabżu l-livell ta’ € 84 miljun.

Finalment, aħna nħeġġuk tagħmel appuntament ma’ wieħed mill-konsulenti tal-investimenti tagħna sabiex jiġi evalwat l-oġġettiv ta’ investiment kurrenti tiegħek u jirrakkomandaw portafoll bi strategija addattata għall-bżonnijiet tiegħek, skond il-profil ta’ riskju li għandek.

 

Din il-ħarsa ġenerali mhix maħsuba biex tikkostitwixxi offerta jew ftehim għax-xiri jew il-bejgħ, u l-investimenti msemmija f’dan id-dokument jistgħu ma jkunux xierqa għal kull investitur. Il-kumpanija jew kwalunkwe kumpanija konnessa, il-klijenti, l-uffiċjali u l-impjegati tagħhom aktarx li jkollhom interess fit-titoli msemmija f’din il-ħarsa ġenerali. Il-prestazzjoni tal-passat mhix gwida għall-prestazzjoni tal-futur u l-valur tal-investimenti jista’ jinżel kif ukoll jitla’.