Profitability Reports of our clients from February 2016
Wednesday, 09 of March 2016
During the month of February it was the equity the financial assets that presented the worst performance, particularly the one from the Eurozone. As the chart shows, the yields of the securities in the Euro Zone (including dividends) were of -3,75% (well below its weekly average of +0,6%).
Both the quarterly computation as the annual yields obtained, continued showing extremely negative values; -17% and -34% respectively. We should pay attention to the supports broken down in the main indexes, which drove to changes in the trends of their respective charts such as the Eurostoxx50. All these cuts would have a positive effect in finding value in the equity securities although the existence of fronts generators of uncertainty in the market (like the risk of BREXIT, the refugee crises, China, the slowdown in the US economy,…) will set back the generation of value.
Eurostoxx50 (SOURCE: Visual Chart)
Fixed Income markets did not suffer large variations.
February’s trend was very similar to January’s, with the exception of the Public Debt within 1 and 3 years, since the yield obtained was of -0,04% below the monthly historical average of +0,2%. In the same way, the annual figure continued close to the maximum loss recorded in the annual historical least.
The evolution has not been much better in corporate debt and convertible debt, the latter was specially affected by the close relationship with the equity market. To highlight, the worrying situation of many companies from the commodity industry (especially oil enterprises) in which they are going through and the negative effect that this is having on the bond issues of such companies.
The yields were around -1,40% in the case of Convertible Debt beating the biggest drops in quarterly historical data, which stood at -5,82%. Corporate Debt is not doing its best since, despite having reached its monthly average, the annual yield is at minimum levels (-3%).
As a counterpart, it was the Public Debt again the great beneficiary. Although the IRR of the Bund is at historical lows, growing concerns about the evolution of the Greek economy, the risk of BREXIT and the lack of agreement in order to form government in Spain, led to increases in the risk premium of peripheral countries in Europe. Thus, monthly returns of the Public Debt continued well above its historical average of one and three months.
The greatest variations in the Exchange Market are found in the EUR/GBP. Again, the pound was harmed by the latent uncertainty in the markets and the risk of the US’s departure from the Eurozone, which led to the British currency left a 2% over the EUR.
We must highlight as well the sharp fluctuations during the week of the dollar against the euro, after hitting levels of 1,1324 EUR/USD following the results published by the US. Despite those fluctuations, the variation in the month was approximately 0% starting and closing February at 1,0873 EUR/USD approximately.