Equity Market Review · 2020/05/05 · Weekly Recap Market Review Global Markets rebounded sharply...

Union Securities Research Team

[email protected]

May 5, 2020

Equity Market Review

Equity Highlights

May 5, 2020 2

Performance

Schedule

Important Events This Week

▪ Tuesday: US ISM Services

▪ Wednesday: Markit PMIs, US Crude Oil Inventories

▪ Thursday: BOE Meeting, US Jobless Claims

▪ Friday: US job Report

Total return performance on both the portfolios and the indices – As of Friday evening

Strategy▪ European Global Leaders

▪ US Global Leaders

▪ Next-Gen Leaders

YtD -19.35% vs -21.22% / 1.87% alpha YtD -11.62% vs -11.82% / 0.20% alpha

Weekly 2.65% vs 4.44% / -1.79% alpha Weekly -0.07% vs -0.19% / 0.12% alpha

2019 32.10% vs 29.34% / 2.76% alpha 2019 35.66% vs 31.49% / 4.17% alpha

2018 -6.90% vs -11.26% / 4.36% alpha 2018 1.48% vs -4.39% / 5.86% alpha

Since Inception 124.80% vs 75.59% / 49.21% alpha Since Inception 235.74% vs 178.19% / 57.55% alpha

Since August 2011 Benchmark: EuroStoxx 50 Since August 2011 Benchmark: S&P 500

YtD -12.04% vs -15.89% / 3.84% alpha YtD -5.56% vs 0.14% / -5.70% alpha

Weekly 0.86% vs 0.70% / 0.15% alpha Weekly -0.13% vs -0.76% / 0.63% alpha

2019 31.59% vs 18.10% / 13.49% alpha 2019 33.55% vs 39.46% / -5.91% alpha

2018 -12.99% vs -16.04% / 3.05% alpha 2018 6.92% vs 0.01% / 6.91% alpha

Since Inception 15.06% vs -5.35% / 20.41% alpha Since Inception 54.62% vs 52.68% / 1.94% alpha

Since August 2017 Benchmark: Topix Since July 2017 Benchmark: Nasdaq

European Global Leaders US Global Leaders

Japanese Global Leaders Next-Gen Leaders

S&P 500 – Q1 Earnings

May 5, 2020 3

More than 50 % of S&P 500 companies have reported so far including all the Tech and Media mega caps.Overall, earnings have exceeded low expectations but with a smaller than average margin.Most companies have removed their guidance and expect a complicated Q2.

% Report % Surprise % Growth % Surprise % Growth

S&P 500 56% 1.1% 1.0% 0.3% -8.6%

Energy 56% 7.6% -11.4% 145.3% -0.1%

Materials 46% 0.6% -8.0% 3.7% -21.4%

Industrials 70% 0.4% -9.1% 8.9% -13.1%

Consumer Discretionary 44% 3.0% 6.7% -7.8% -15.3%

Consumer Staples 70% 0.9% 4.8% 4.1% 4.4%

Health Care 60% 3.0% 10.8% 9.1% 5.3%

Financials 85% -0.9% 0.9% -22.3% -37.0%

Information Technology 49% -1.9% 5.0% 0.3% 5.6%

Communication Services 45% -0.3% 3.4% 2.7% -0.8%

Utilities 21% -6.8% -3.6% 3.0% 7.0%

Real Estate 29% 2.1% 7.8% 1.9% 13.4%

Sales Earnings

Weekly Recap

May 5, 2020 4

Weekly Recap

❑ Market Review

▪ Global Markets rebounded sharply on strong US earnings and hopes of progress for a coronavirus

treatment. Europe’s virus death toll continues to decline as lockdown easing begins. The European

Commission announced a €7.5bn package to develop and manufacture a vaccine.

▪ Fed Chairman Powell said the coronavirus has brought the US economy to an abrupt halt, and is uncertain

how long the recession will last. The FOMC said in a unanimous statement that it “will use its tools and act as

appropriate to support the economy.” The Fed expanded the scope of a $500bn emergency lending

program that provides short-term credit to state and local governments.

▪ The ECB left rate unchanged, expanded its program of loans to banks at record-low rates and warned that

the eurozone economy could shrink by as much as 12%. It is also prepared to increase its QE and European

regulators will provide banks with a fourth round of capital relief.

▪ US GDP contracted at an annual rate of 4.8% in Q1 while French GDP contracted at a 5.8% rate.

May 5, 2020 5

European Global Leaders – Weekly Recap

❑ Equity Top News

▪ The strategy had positive performance, but underperformed its benchmark.

▪ Banks were the best sector last week. Banco Santander released earnings slightly better than expected,

even if the bank set aside €1.6bn, the highest provisions by a Eurozone bank so far.

▪ Volkswagen expects to be profitable on a FY basis, despite car sales dropped by 23% on the year, causing

operating profit to tumble 81% in Q1, forcing the manufacturer to withdraw its outlook for 2020.

▪ After a strong increase in April, Healthcare was last week the worst sector as investors took profit, even if

Novartis and AstraZeneca Q1 earnings beat expectations and maintained their 2020 profit guidance.

AstraZeneca agreed to make an experimental coronavirus vaccine, and Roche received authorization from

the FDA for its Covid-19 test and has already started making shipments.

▪ Royal Dutch Shell cut its dividend for the first time since WW2 to preserve cash as it prepares for a

protracted slump in demand for oil. It also suspended share buybacks after its net profit almost halved in Q1.

May 5, 2020 6

US Global Leaders – Weekly Recap

❑ Equity Top News

▪ The strategy is positive and similar to its benchmark.

▪ Facebook revenue jumped 18% and sales were steady in April despite some pressure on ad prices. Daily

average users for its Facebook, WhatsApp and Instagram platforms rose to 2.36bn.

▪ Alphabet Q1 sales beat estimates thanks to a 33.5% rise in YouTube revenues and a 52% jump in Google

Cloud sales. Search and display ad revenue dropped more than 10% in March as corporates slash their

marketing budgets.

▪ Apple’s Q1 sales grew 1% but profit fell 3%. Services and wearables business grew 18% while hardware

sales dropped 7%. It raised its dividend by 6% but reduced its buyback program to $50bn. Apple is delaying

the production of its new iPhones by about a month, as the pandemic disrupts manufacturing.

▪ Microsoft released better than expected Q1 earnings and sales driven by a 27% jump in cloud sales amid a

boom in remote working. It also confirmed the launch of the new Xbox this holiday season.

▪ Amazon dropped despite a 26% jump in Q1 sales as it spent its entire $4bn profit to keep logistics

operations running smoothly during the pandemic and as shipping costs rose 49%. The company also noted

reduced advertising revenues. Amazon Web Services sales grew 33% but underperformed competitors.

▪ Merck lowered its FY20 guidance, expecting a $2.1bn revenue hit over prescription drug sales as many

patients with chronic conditions stay away from their doctors. However, Q1 earnings beat expectations.

▪ ExxonMobil posted its first quarterly loss following its 1999 merger, driven by a $2.9bn charge linked to

write-downs from the collapse in oil prices. It will also slash its 2020 spending by 30% to $23bn.

May 5, 2020 7

Next-Gen Leaders – Weekly Recap

❑ Equity Top News

▪ The strategy had a strong positive performance and profited from the high beta of its components.

▪ ServiceNow Q1 EPS beat estimates and management projected rising sales in Q2 amid strong demand for

their business workflow software.

▪ CoStar Group reported strong results. Q1 revenue increased 19% with Apartments.com revenue growing

20% and LoopNet revenues up 23% YoY, traffic to platforms reached record levels with an average of 55M

monthly unique visitors. But company is withdrawing its previously announced guidance for FY 2020.

▪ IQVIA released solid Q1 2020 results and its research pipeline remains solid despite clinical trial disruptions

in the near-term.

▪ Illumina’s Consumables and Services rose 15% and 13% respectively, and company sees a stabilization in

sequencing run trends in recent weeks. But sales of sequencing systems dropped 25%.

▪ Wirecard failed to reassure investors after KPMG finally delivered its special investigation audit report.

KPMG said no significant findings have been made which would require an adjustment of the annual

accounts 2016-2018, but has identified organizational weakness, which had already been identified by

Wirecard. It will publish the final report as soon as possible.

▪ Stryker’s sales dropped 30-40% in April amid deferrals of surgical procedures and a drop of hospitals’

Capex. Q1 EPS beat estimates.

May 5, 2020 8

Conviction Portfolios

European Global Leaders

US Global Leaders

Japan Global Leaders

Next-Gen Leaders

May 5, 2020 9


May 5, 2020 10

Total Return performance on both the portfolio and the index.

The full list of constituents is available on our website.

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European Global Leaders EuroStoxx 50 Total Return

European GL EuroStoxx 50 Delta

Weekly Performance 2.65% 4.44% -1.79%

YtD Performance -19.35% -21.22% 1.87%

1Y Volatility 25.6% 28.0% -2.4%

Perf.since inception 122.9% 75.3% 47.6%

Annualized Perf. 13.8% 9.5% 4.3%

2019 32.1% 29.3% 2.8%

2018 -6.9% -11.3% 4.4%

Volatility 16.1% 20.4% -4.2%

Max Draw Down -36.1% -38.2% 2.1%

Inception Date 31 Aug 2011


May 5, 2020 11

Weights within the portfolio are comprised between 2% and 5%

Name TickerExch

CodeTheme Sector

Mkt Cap

($bn)Country

Nestlé NESN SW Food Products Consumer Staples 316.9 Switzerland

Roche ROG SW Pharmaceuticals Health Care 308.7 Switzerland

Novartis NOVN SW Pharmaceuticals Health Care 227.1 Switzerland

LVMH MC FP Luxury Goods Consumer Discretionary 190.2 France

Novo Nordisk NOVOB DC Pharmaceuticals Health Care 156.2 Denmark

L'Oréal OR FP Household Products Consumer Staples 147.9 France

SAP SAP GY Software Information Technology 143.5 Germany

Astrazeneca AZN LN Pharmaceuticals Health Care 134.8 Britain

RDSA (EUR) RDSA NA Big Oil Energy 132.0 Netherlands

Unilever NV UNA NA Food and Household Products Consumer Staples 131.7 Britain

ASML ASML NA Semiconductors Equipment Information Technology 125.2 Netherlands

Total FP FP Big Oil Energy 89.0 France

Inditex ITX SM Apparel Consumer Discretionary 80.0 Spain

Allianz ALV GY Diversified Insurance Financials 72.1 Germany

Volkswagen VOW3 GY Automobiles Consumer Discretionary 69.2 Germany

Kering KER FP Luxury Goods Consumer Discretionary 62.8 France

Schneider Electric SU FP Energy Management Industrials 51.6 France

Essilor EL FP Medical Devices Consumer Discretionary 51.1 France

Heineken HEIA NA Brewers Consumer Staples 48.2 Netherlands

Vinci DG FP Infrastructure Industrials 47.4 France

Dassault Systemes DSY FP Software Information Technology 40.0 France

Philips PHIA NA Health Care Health Care 39.2 Netherlands

AXA CS FP Diversified Insurance Financials 39.1 France

BNP BNP FP Banks Financials 36.9 France

Banco Santander SAN SM Banks Financials 34.7 Spain

Ferrari RACE IM Luxury Goods Consumer Discretionary 29.4 Italy

Intesanpaolo ISP IM Banks Financials 26.1 Italy

Vivendi VIV FP Media Communication Services 25.3 France

Fresenius FRE GY Diversified Health Care Health Care 23.3 Germany

Thales HO FP Defense Industrials 16.0 France

Ubisoft UBI FP Video Games Communication Services 9.2 France

US Global Leaders

May 5, 2020 12



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US Global Leaders S&P 500 Total Return

US GL S&P 500 Delta

Weekly Performance -0.07% -0.19% 0.12%

YtD Performance -11.62% -11.82% 0.20%

1Y Volatility 32.1% 32.6% -0.5%



2019 35.7% 31.5% 4.2%

2018 1.5% -4.4% 5.9%

Volatility 16.6% 17.0% -0.3%

Max Draw Down -32.7% -33.8% 1.0%


US Global Leaders

May 5, 2020 13


Name TickerExch

CodeTheme Sector Mkt Cap ($bn)

Apple AAPL US Hardware Information Technology 1364.9

Microsoft MSFT US Software Information Technology 1244.9

Alphabet GOOGL US Internet Media Communication Services 992.6

Amazon AMZN US e-Commerce Consumer Discretionary 923.2

Facebook FB US Internet Media Communication Services 630.7

Berkshire Hathaway BRK/B US Investment Company Financials 558.3

JP Morgan JPM US Banks Financials 428.8

Visa V US Payment Technology Information Technology 393.3

Johnson & Johnson JNJ US Pharmaceuticals Health Care 386.9

Mastercard MA US Payment Technology Information Technology 317.0

Bank of America BAC US Banks Financials 306.3

Exxon XOM US Big Oil Energy 292.3

AT&T T US Big Telco Communication Services 276.6

Walt Disney DIS US Media & Entertainement Communication Services 260.1

Verizon VZ US Telcos Communication Services 244.4

Merck & Co MRK US Pharmaceuticals Health Care 233.1

Chevron CVX US Big Oil Energy 219.6

Pepsico PEP US Food Products Consumer Staples 194.1

Citigroup C US Banks Financials 171.7

Adobe ADBE US Software Information Technology 166.0

Nike NKE US Apparel Consumer Discretionary 160.1

McDonald's MCD US Restaurants Consumer Discretionary 158.0

Medtronic MDT US Medical Devices Health Care 157.3

Bristol Myers BMY US Pharmaceuticals Health Care 155.9

Costco COST US Mass Merchants Consumer Staples 132.9

Accenture ACN US IT Services Information Technology 131.8

Honeywell HON US Diversified Industrials Industrials 129.1

Starbucks SBUX US Restaurants Consumer Discretionary 108.1

Goldman Sachs GS US Banks Financials 90.4

Japanese Global Leaders

May 5, 2020 14



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Japan Global Leaders Topix Total Return

Japan GL Topix Delta

Weekly Performance 0.86% 0.70% 0.15%

YtD Performance -12.04% -15.89% 3.84%

1Y Volatility 22.4% 20.1% 2.3%

Perf.since inception 15.1% -5.3% 20.4%

Annualized Perf. 7.6% -2.8% 10.5%

2019 31.6% 18.1% 13.5%

2018 -13.0% -16.0% 3.0%

Volatility 20.6% 17.4% 3.2%

Max Draw Down -28.1% -32.2% 4.1%


Japanese Global Leaders

May 5, 2020 15


Name TickerExch

CodeTheme Sector

Mkt Cap

($bn)

Toyota Motor 7203 JT Automobiles Consumer Discretionary 228.0

Softbank Group 9984 JT Technology Conglomerate Communication Services 92.6

Sony 6758 JT Consumer Electronics Consumer Discretionary 91.8

Keyence 6861 JT Factory Automation Information Technology 86.8

Recruit Holdings 6098 JT Human Resources Industrials 65.3

Nintendo 7974 JT Video Games Communication Services 51.4

Nidec 6594 JT Precision Motors Industrials 41.0

Kao 4452 JT Household Products Consumer Staples 40.0

Shiseido 4911 JT Cosmetics Consumer Staples 28.6

Terumo 4543 JT Medical Devices Health Care 27.3

Komatsu 6301 JT Construction Machinery Industrials 23.2

Next-Gen Leaders

May 5, 2020 16



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Next-Gen Leaders Nasdaq 100 Total Return

Next-Gen Nasdaq Delta

Weekly Performance -0.13% -0.76% 0.63%

YtD Performance -5.56% 0.14% -5.70%

1Y Volatility 33.1% 33.6% -0.5%



2019 33.5% 39.5% -5.9%

2018 6.9% 0.0% 6.9%

Volatility 26.8% 25.3% 1.4%

Max Draw Down -32.9% -28.0% -4.9%

Inception Date 31 Jul 2017

Next-Gen Leaders

May 5, 2020 17


Name TickerExch

CodeGroup Theme Category Sector Risk Category

Mkt Cap

($bn)Country

Palo Alto Network PANW US B2B CyberSecurity Firewalls Information Technology Core 23.6 United States

CyberArk Software CYBR US B2B CyberSecurity Priviledged Access Information Technology Speculative 5.2 Israel

Illumina ILMN US B2B Health Care Diagnostics Health Care Core 47.1 United States

Stryker SYK US B2B Health Care Surgical Robot Health Care Core 77.4 United States

Intuitive Surgical ISRG US B2B Health Care Surgical Robot Health Care Core 69.0 United States

Cap Gemini CAP FP B2B Knowledge Consulting Information Technology Core 21.7 France

Splunk SPLK US B2B Knowledge Data Analysis Information Technology Speculative 24.3 United States

CoStar Group CSGP US B2B Knowledge Information Industrials Core 23.8 United States

IQVIA IQV US B2B Knowledge Pharmaceutical Research Health Care Core 30.9 United States

IHS Markit INFO US B2B Knowledge Research & Analytics Industrials Speculative 31.8 Britain

Gartner IT US B2B Knowledge Research & Analytics Information Technology Core 14.2 United States

Adobe ADBE US B2B Productivity Creativity & Design Information Technology Core 166.0 United States

Dassault Systemes DSY FP B2B Productivity Creativity & Design Information Technology Core 45.9 France

Autodesk ADSK US B2B Productivity Creativity & Design Information Technology Core 42.0 United States

Ansys ANSS US B2B Productivity Creativity & Design Information Technology Core 22.6 United States

Trimble TRMB US B2B Productivity IoT Information Technology Core 10.6 United States

Salesforce.com CRM US B2B Productivity SaaS - Productivity Information Technology Core 160.6 United States

Servicenow NOW US B2B Productivity SaaS - Productivity Information Technology Core 57.5 United States

Workday WDAY US B2B Productivity SaaS - Productivity Information Technology Core 41.2 United States

Coupa Software COUP US B2B Productivity SaaS - Productivity Information Technology Speculative 10.8 United States

Zalando ZAL GY B2C E-Commerce Retail Consumer Discretionary Speculative 13.2 Germany

Paypal PYPL US B2C FinTech Payment Technology Information Technology Core 134.9 United States

Square SQ US B2C FinTech Payment Technology Information Technology Speculative 30.2 United States

Wirecard WDI GY B2C FinTech Payment Technology Information Technology Speculative 17.7 Germany

Match Group MTCH US B2C Media Social Communication Services Speculative 25.5 United States

Activision Blizzard ATVI US B2C Media Video Games Communication Services Core 45.8 United States

Electronic Arts EA US B2C Media Video Games Communication Services Core 32.0 United States

Take-Two Interactive TTWO US B2C Media Video Games Communication Services Core 14.4 United States

Ubisoft UBI FP B2C Media Video Games Communication Services Speculative 8.7 France

Contacts

May 5, 2020 18

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Equity Market Review · 2020/05/05 · Weekly Recap Market Review Global Markets rebounded sharply...

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